Germany's Budget Clash: Intel Subsidies at the Center of Coalition Dispute

A new budget conflict has emerged within Germany's ruling coalition. The finance ministry wants funds, initially meant for Intel's chip plants, to balance the federal budget, while the economy ministry contends they should remain reserved for other pressing needs. This dispute highlights broader tensions within the coalition government.

Germany's ruling coalition faced a new budget conflict on Monday, centering on subsidized funds for Intel's new chip-making plants. The finance ministry proposed reallocating the funds to balance the budget, while the economy ministry argued for keeping the subsidies. Berlin had agreed to nearly 10 billion euros in subsidies with Intel for plants in Magdeburg.

Intel CEO Pat Gelsinger announced a two-year construction pause for the German project, amid efforts to bridge a 12 billion euro budget gap for 2025. This announcement heightened tensions within Chancellor Olaf Scholz's coalition.

Finance Minister Christian Lindner, of the Free Democrats, stressed the need to reserve unused funds to address unresolved financial issues, while Economy Minister Robert Habeck, of the Greens, advocated for a careful and sensible use of the resources for the country's benefit. A source indicated the funds came from the off-budget climate and transformation fund, which faced cuts last year, adding to coalition friction.

(With inputs from agencies.)