Friedrich Merz (CDU), calls for an “agenda for the hardworking”. But he doesn’t see any scope for major tax relief.
Berlin – In September, inflation fell to 1.6 percent – the lowest price increase since February 2021. Energy in particular became cheaper. However, the consumer mood remains poor and consumers prefer to save. And high interest rates are slowing down investments. Federal Economics Minister Robert Habeck (Greens) had predicted growth of 0.3 percent just a few months ago. According to the report, Habeck now assumes that the economy will shrink by 0.2 percent this year after adjusting for prices. Germany therefore remains at the bottom of the list for growth in Europe.
At the turn of the year, however, the federal government believes that the economy will gradually overcome the economic weakness and develop more dynamically again. Habeck expects real gross domestic product to increase by 1.1 percent in 2025 instead of the previous one percent. The minister even expects economic growth of 1.6 percent for 2026.
Habeck: We have to act quickly
The President of the World Economic Forum, Borge Brende, is also confident. Germany has an industrial base and experience, he said in Berlin. “This knowledge can easily be transferred from one area of the industry to new ones. It’s in people’s heads, in organizations and institutions.” Germany is already investing more in semiconductor technologies, cloud and data centers. 20 years ago, Germany was once considered the sick man of Europe and found its way back to competitiveness with structural reforms. Brende called for investments not to slow down. The debt brake, he warned, was “self-imposed”.
Habeck sees the prerequisite for this as implementing the traffic light’s latest growth initiative quickly and without making any compromises. The package includes, among other things, tax improvements for companies willing to invest, work incentives for older people and foreign skilled workers, the reduction of bureaucracy and permanently lower electricity prices for manufacturing companies. “There is still a great need for action,” said Habeck.
Mercury Commentary: The curtain falls in the illusion theater
Merz: No scope for tax cuts
Friedrich Merz, the Union’s candidate for chancellor, said SZthe German economy can no longer keep up with the dynamics of the world. He calls for an “agenda for the hardworking”. But he doesn’t see any scope for major tax relief. Instead, he is planning small, multi-stage relief for companies. He also mentioned a tax exemption for overtime as a possible measure to improve “the basic mood in Germany”.
When asked about his lack of government experience, Friedrich Merz said: “Yes, I have designed my life differently than Mr. Scholz. I didn’t decide after a short time in the job to be a professional politician long-term and alone.” He had a “long professional life”, worked for two large American companies in Germany and had a lot to do with medium-sized companies. “If you’ve only ever been in politics, you’re missing that part of life experience,” he said. “A large part of the population no longer wants to have the experience with Olaf Scholz”.
After Merz retired from politics in 2009, he made a fortune as chairman of the supervisory board of the German division of the investment company Blackrock. He reported his annual income in 2018 as around one million euros. Merz resigned from his position at Blackrock and other consulting positions in business in 2020. (Theresa Münch and Wolfgang Hauskrecht)
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