Germany 's opposition Social Democrats have revived the idea of shared sovereign liability among euro zone members, saying it "can no longer be a taboo" in the Eu ropean debate.
The SPD hopes to steal a march on chancellor Angela Merkel by co-opting the idea of a "debt redemption fund", first proposed last year by leading German economists. Their proposal would see a central fund buying up crisis-hit country debt above 60 per cent of gross domestic product, unburdening their economies in exchange for agreement on a strict debt repayment plan.
The idea was buried by Dr Merkel as political unpalatable but the SPD is hoping it will appeal to more German voters than continued ECB bond-market interventions. The proposal is contained in the draft election manifesto of the SPD, which plays the fairness card in a bid to regain the “social justice” mantle lost a decade ago.
Mr Steinbrück, an SPD centrist beholden to a dominant party left-wing, dismissed claims the manifesto, promising higher taxes for the wealthy and a property tax, amounts to a roll-back of Schröder-era economic reforms. Proposed policies include an increase from 42 to 49 per cent in the income tax rate for those earning more than ¤100,000 and a statutory minimum wage of at least ¤8.50.
The programme promises to push for greater regulation of financial markets where “many products continue to be traded without controls – with dangerous consequences”.
Yesterday Mr Steinbrück was given the support of ex-chancellor Gerhard Schröder. Visiting the SPD parliamentary party for the first time in eight years, Mr Schröder said it was not forbidden to adjust details of the reform programme.
“It’s not the 10 commandments and I’m not Mose s,” he said. A decade ago, he introduced the Agenda 2010 reforms to cut welfare and liberalise labour laws. Though credited with turning around the German economy, these polarised his party, alienated left-wing voters and, eventually, drove Mr Schröder from office. The new manifesto declares the SPD to be the “European Party of Germany”, though EU policy is banished to four pages at the end of the manifesto.
This reflects a dilemma facing the SPD in the upcoming election: how to criticise Merkel's euro crisis measures which it has supported in the Bundestag. The party accuses the Merkel government of a "cold-hearted" response to the crisis "as if the problems of our neighbours and friends were nothing to do with us".
