Germany's incoming finance minister rings alarm bell on inflation


FILE PHOTO: Free Democratic Party (FDP) leader Christian Lindner delivers a statement after a final round of coalition talks to form a new government, in Berlin, Germany, November 24, 2021. REUTERS/Fabrizio Bensch

BERLIN (Reuters) - Germany's incoming Finance Minister Christian Lindner on Tuesday vowed to champion solid public finances and a reduction of debt levels across the euro zone so that the European Central Bank (ECB) could fight inflation without hesitation if needed.

Lindner's comments, posted on Twitter, came after data showed on Monday that German consumer price inflation accelerated further in November to reach its highest level in nearly three decades.

"The inflation gives rise to legitimate concerns. In the case of currency devaluation, we'll observe how it develops after the pandemic," Lindner wrote in his tweets.

Lindner, whose business-friendly Free Democrats are set to be the smallest junior partner in a three-way coalition with the centre-left Social Democrats and the pro-spending Greens, said the new government would not push prices any further.

"Therefore, there'll be no tax increases," Lindner said, adding that the three parties agreed to reduce electricity prices by abolishing a special surcharge introduced to finance the expansion of renewable energies.

Lindner also promised that the government would give back any additional revenue caused by rising carbon prices to households.

"In Europe and Germany, we'll advocate solid public finances and limiting debt. Excessively high government deficits would restrict the ECB from fighting inflation if necessary," Lindner warned.

His remarks were echoed by outgoing Bundesbank President and ECB policymaker Jens Weidmann who said the ECB should keep an arm's length from governments by resisting pressure to bankroll indebted states or pursue goals other than price stability.

(Reporting by Michael Nienaber; Editing by Kirsten Donovan)

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