Economic situation or cycle - Economic Associations: Growth Package is not enough
Leading German business associations are not satisfied with the growth package planned by the Federal Government. Rainer Dulger, president of the Federal Association of German Employers' Associations, told the German Press Agency: "Many ideas of the Federal Government are heading in the right direction, but in the end it's not enough. It's just reforms. But the situation is serious."
Siegfried Russwurm, president of the German Industry Association, told the German Press Agency: "Small steps are being made. That's better than nothing, but more decisive action is needed."
Government expects growth impulses
For this year, only a mini-growth is expected in Germany. The Federal Government plans to counteract this with a "Growth Initiative". Planned measures include improvements in investment depreciation and research allowances.
Additionally, the government plans to reduce bureaucracy and relieve energy-intensive companies from electricity prices. Employees should receive incentives to work more and longer. In total, 49 measures are planned, and there should be various legislative amendments by the end of the year. The growth package could, according to government estimates, lead to additional growth of more than half a percent in the next year.
Industry: Cautious about announcements
"It's nice that the Federal Government apparently recognizes the urgent need for action and no longer expects growth to happen on its own," said Russwurm, president of the Federation of German Industries. "The Growth Initiative addresses a whole range of issues we've been advocating for a long time. That's the positive. However, it remains unclear when, in the end, a law will emerge from this Growth Initiative. The experiences with the Growth Chance Act, which after six months of consideration at all levels has become a mere piece of legislation, make us cautious in our announcements."
The Growth Chance Act of the Federal Government with reliefs for companies was, according to the volume, significantly smaller than planned in the deliberation process between the Federal Council and the Bundestag in the spring.
Industry for lasting improvements
Russwurm called for extended depreciation possibilities until the end of 2028 instead of only until the end of 2024. With regard to the higher growth potential of the German economy, it would be desirable for such depreciation rules to be permanently fixed. "The same applies to the research allowance, which must be permanently expanded to a internationally competitive level."
It is rather a stimulus package than a structurally effective initiative for sustainable growth. "A stimulus package is something good, but it remains to be seen whether it will significantly increase the current trend growth of 0.5 percent."
Dulger: Uncertainty among businesses
"When trust is damaged, it's very hard to get it back," said Dulger, president of the Federal Association of German Employers' Associations. "That can't be done with a mini-package. We'll need ten or twenty packages to get this location back in swing." The responsible parties must make competitiveness the focus of their political thinking and actions.
Only then will the economy regain confidence. "The Federal Government needs to give us something that we can take to the companies and say: Look, this is what's moving us all forward, this is what has really helped us."
Dulger stated, looking at increased competitiveness: "This includes affordable electricity for all, affordable housing for all, more net income for all. And simplifications for businesses and employees regarding bureaucracy. This also means understanding that digitalization is an opportunity and not a burden."
Employers' Association President: Far from Elite Class
"It's not the case that the federal government sets up a program and suddenly Germany plays Champions League instead of Regionalliga," Dulger said. "We are far from that, and it needs to be clearly stated. This requires a coach and a manager who can rebuild the team piece by piece over years. And I don't see that in the federal government at the moment."
- Despite voicing satisfaction with some aspects of the Federal Government's Growth Initiative, leading business associations express concerns about its effectiveness in addressing Germany's economic challenges.
- Rainer Dulger, president of the Federal Association of German Employers' Associations, emphasizes the need for more than just reforms and calls for multiple growth packages to restore business confidence.
- The German Industry Association, led by Siegfried Russwurm, welcomes the Government's recognition of the need for action yet expresses caution due to experiences with past legislation like the Growth Chance Act.
- The Federal Government's Growth Initiative aims to counteract a projected mini-growth in Germany for this year with a range of measures, including reducing bureaucracy and assisting energy-intensive companies.
- The proposed Growth Initiative could potentially lead to an additional growth of over half a percent in the next year, according to government estimates, but the industry remains skeptical about its long-term sustainability.
- Russwurm of the Federation of German Industries advocates for permanent depreciation possibilities and an expansion of research allowances to a competitive international level, considering the higher growth potential of the German economy.
- Dulger of the Federal Association of German Employers' Associations highlights the necessity for the Federal Government to prioritize competitiveness through actions geared towards affordable electricity, housing, and net income, as well as bureaucratic simplifications for businesses and employees.
