The federal government wants to stimulate the economy with a “growth initiative”. But business associations are skeptical.
Leading associations of German business believe that the federal government’s planned growth package is not sufficient. Employers’ President Rainer Dulger told the German Press Agency: “Many of the federal government’s ideas are going in the right direction, but in the end they are all far too little. They are small reforms. But the situation is too serious for that.”
Industry President Siegfried Russwurm told the dpa: “Progress is being made in small steps. That is better than nothing happening, but even more decisive action would be necessary.”
Government expects economic stimulus
Only minimal growth is expected in Germany this year. The federal government wants to counteract this with a “growth initiative”. For example, improvements in investment depreciation and the research allowance are planned.
The traffic light coalition also wants to reduce bureaucracy and reduce energy-intensive companies’ electricity prices. Employees should be given incentives to work more and longer. A total of 49 measures are planned, and various legislative changes are to be made by the end of the year. The government estimates that the growth package could lead to additional growth of more than half a percent next year.
Industry: Be cautious with announcements
“It is encouraging that the federal government clearly recognizes the urgent need for action and no longer expects growth to occur on its own,” said Russwurm, President of the Federation of German Industries. “The growth initiative addresses a whole series of points that we have been calling for for a long time. That is the positive thing. It remains to be seen when this growth initiative will ultimately become a law. The experience with the Growth Opportunities Act, which became a small law after six months of consideration at all levels, means that we are still cautious about making any announcements.”
Following a mediation process between the Federal Council and the Bundestag in the spring, the Federal Government’s Growth Opportunities Act, which provides relief for companies, turned out to be significantly smaller in volume than planned.
Industry for lasting improvements
Russwurm said that the planned extended depreciation options until the end of 2028 would be better than just until the end of 2024. However, with a view to the higher growth potential of the German economy, it would be desirable for such depreciation rules to be made permanent. “The same applies to the research allowance, which must be permanently expanded to an internationally competitive level.”
It is more of an economic stimulus package than a structurally effective initiative for more permanent growth. “An economic stimulus package is also a good thing, but it remains to be seen whether it will significantly increase trend growth from the currently very low 0.5 percent.”
Dulger: Uncertainty among companies
“Once trust is damaged, it is very difficult to regain it,” said Dulger, President of the Confederation of German Employers’ Associations. “That cannot be done with a mini-package. We will need 10 or 20 packages to get this location back on track.” Those responsible must make competitiveness the focus of their political thinking and actions.
Only then will the economy regain confidence. “The federal government must give us something that we can take to companies and say: Look, this is moving us all forward, this has really helped us.”
With a view to greater competitiveness, Dulger said: “This includes affordable electricity for everyone, this includes affordable housing for everyone, this includes more net from gross for everyone. And relief for companies and employees in terms of bureaucracy. This includes understanding that digitization is an opportunity and not a burden.”
Employers’ President: Far from top class
“It’s not the case that the federal government is setting up a program and Germany is suddenly playing in the Champions League again instead of the regional league,” said Dulger. “We are far from that, that has to be made clear. That requires a coach and a manager who will rebuild the team over the years, bit by bit. And I don’t see that in the federal government at the moment.”
Source: Stern
