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The
German economy has shrunk for the past two years and hasn't seen
significant growth for much longer. Chancellor Friedrich Merz’s
government has made revitalizing it a priority since taking
office in early May.
Economy Minister Katherina Reiche said in a statement that “we
need to act, now” on competitiveness and innovation. She noted
that a significant part of the expected growth will come from
the plans for high government spending, and even that will only
be effective if investments are made quickly — requiring fast
planning and approval processes, something that Germany so far
has lagged on.
“To secure long-term growth, we must end the reform backlog —
reduce energy costs, foster private investment, addres the tax
burden that is high by international standards, dismantle
bureaucracy, open markets and enable innovation,” she added.
Merz's government has launched a program to encourage investment
and set up a 500 billion-euro ($584 billion) fund to pour money
into Germany’s creaking infrastructure over the next 12 years.
It is promising to cut red tape and speed up the country’s
lagging digitization.
A group comprising dozens of companies pledged in July to invest
at least 631 billion euros in Germany over the next three years,
a figure that included some previously planned investments but
was designed to send a signal of confidence in the economy.
Germany for years expanded exports and dominated world trade in
engineered products like industrial machinery and luxury cars.
But it has suffered from increasing competition from Chinese
companies, along with many other factors that have increased
risks, including U.S. President Donald Trump’s tariffs and trade
threats.
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