German Chancellor Olaf Scholz promised relief for the country's economy and measures to promote business investment in remarks on Monday at an industry conference in Berlin, as a key business lobbyist demanded action.
Scholz said that his three-party coalition is planning a "dynamization package" to spur growth, including reforms to boost the country's labour force by making longer working hours much more attractive.
He also said measures to make it easier for parents of young children to work should be increased, including through tax incentives.
"I could imagine that we could go one better in terms of depreciation and research funding than what we have achieved with the Growth Opportunities Act," Scholz said, referring to a previous set of pro-business measures passed by his coalition.
But doing so would require support from the leaders of Germany's 16 states, who previously insisted on reducing some of the tax breaks and other measures in the Growth Opportunities Act.
Boost for business in tight 2025 budget?
Scholz's coalition has been locked in tough negotiations over the draft 2025 budget for weeks. Several departments do not want to comply with Finance Minister Christian Lindner's savings targets.
Ministers from Scholz's Social Democrats (SPD) and the Greens have urged loosening Germany's tight restrictions on government borrowing and deficit spending, something that Lindner, a leader of the pro-business liberal Free Democrats (FDP), has ruled out.
Scholz said at the Day of German Industry conference on Monday that "investing in the future" would be a high priority for Germany next year.
He acknowledged that volatile energy prices as well as plans to increase renewable electricity sources had posed challenges for German industry, particularly because of lower energy costs elsewhere in the world.
He said the government is in discussions about how to make permanent several energy cost relief measures that are currently set to expire, such as a reduced electricity tax for manufacturers.
Industry leader says economy held back
The president of the Federation of German Industries (BDI), Siegfried Russwurm, urged Scholz's government to take decisive action to boost growth.
Russwurm said companies want to invest in Germany and grow their operations in the country but are being hindered by issues including excessive bureaucracy and open questions about future energy policy.
Russwurm said that the "dynamization package" touted by Scholz to boost weak economic growth in Germany would need to live up to its name.
He called for rules around depreciation to be made more favourable to business, a reduction in bureaucracy and clarity regarding future energy policy. His wish list also includes more skilled workers and lower corporate taxes.
Businesses want to grow, "but this is not possible with the handbrake on," he said.
Fees charged to fund a planned expansion of Germany's electricity grid cannot be allowed to drive up energy costs in the country, which are already relatively high, Russwurm said.
Scholz: China must talk on tariffs
Scholz also called for movement from China in the dispute over potential European Union tariffs on Chinese electric vehicles.
The chancellor welcomed the European Commission's offer of negotiations with China, but warned there is little time left before the threatened punitive tariffs could begin taking effect on July 4.
"It is clear that we also need serious movement and progress from the Chinese side at this point," Scholz said.
The European Commission has accused Beijing of unfairly subsidizing battery-powered vehicles, and published plans for punitive tariffs on electric vehicle imports from China in mid June.
Germany's large and influential automotive industry has expressed serious concerns about the tariffs, in part because of fears that China could retaliate with tariffs on German auto exports to the lucrative Chinese market.
The tariffs, which could be as high as 38.1%, could be imposed retroactively from July 4 if a deal is not reached, although a final determination is not due until early November.
Both sides announced on Saturday that they are interested in negotiations.
Habeck calls for more agile EU
Also speaking at the conference, German Economy Minister Robert Habeck argued in favour of fundamental reforms in the European Union to make the bloc more agile and less bureaucratic.
He also named seven specific points he would like to see implemented by the next European Commission.
Those measures include assessing potential business mergers in the EU according to the global market and not solely from the perspective of the EU internal market.
The EU's defence industry must be strengthened, said Habeck, a Green party politician who also serves as Germany's vice chancellor.
Free trade agreements should be agreed to only at the EU level, instead of going through the parliaments of the many countries in the bloc, Habeck contended.
Scholz also spoke in favour of such an policy on Monday, warning that otherwise trade deals risked years of delays during the ratification process in various EU countries.
Russwurm for his part pointed to the failure of a trade agreement with Australia and long negotiations on a trade agreement between the EU and the South American MERCOSUR trade group, which is made up of Argentina, Brazil, Paraguay, Uruguay and Venezuela.
