With Germany posting the worst performance among major economies in terms of economic growth in 2023, according to the International Monetary Fund (IMF), representatives of its tripartite government coalition hope that cutting red tape, renewable energy and better conditions for start-ups can be overcome. crisis.
In a forecast for all of 2023 published in JulyThe IMF expects the German economy to contract by 0.3% this year, which would put the country behind all other major economies, which manage to have positive growth rates this year .
While these figures have sparked a debate in Germany over how to overcome the country’s economic crisis, the solutions proposed by members of its tripartite governing coalition of social democrats (SPD/S&D), Greens and liberals (FDP /Renew Europe) ) differ considerably.
Finance Minister Christian Lindner (FDP), usually a budget hawk skeptical of measures weighing on public finances, proposed an annual tax relief plan of 6 billion euros for businesses, which was temporarily interrupted due to internal conflicts within the coalition.
Sandra Detzer, MP and Green economic affairs spokesperson, said that while she supports the tax relief package, “more important than short-term impulses are long-term reforms aimed at strengthen German competitiveness, which have been delayed for years. so long”.
“The development of renewable energies for cheap energy, the law on skilled labor immigration to combat the shortage of skilled workers and the control of practices for less bureaucracy are important steps of the coalition aiming to reestablish Germany as an economic location,” Detzer added.
Even though new renewable energy sources, such as wind and solar power, have lower production costs than other energy sources, experts we don’t think Germany gets a competitive advantage in this regardbecause unlike other European countries, it lacks, for example, flexible hydroelectricity capacities.
Liberals and conservatives want to cut red tape
His liberal counterpart Reinhard Houben, FDP MP and spokesperson for economic affairs, said that after the adoption of the tax relief plan, “the next step will be a plan to reduce bureaucracy, which (the minister of Justice) Marco Buschmann will launch this year”.
Buschmann, who had announced he would present a list of proposals to cut red tape later this year, said in May this year that while his government was “leading the way in reducing bureaucracy in our own country , (…) many requirements and regulations are decided. at the European level “.
Therefore, Buschmann said he would support French President Emmanuel Macron’s call for a “pause” on new environmental legislation at EU level, which was also supported by Belgian Prime Minister De Croo as well as German opposition parties CDU/CSU (EPP), contrasting with his own CDU party member, Commission President Ursula von der Leyen.
Social Democrats praise start-up financing law
Asked how to improve economic growth, Verena Hubertz, deputy parliamentary group leader of the government SPD party, praised the bill on financing conditions for start-ups adopted by the government last week.
“The facilitated form of employee equity participation will attract sought-after international talent especially in the start-up scene,” Hubertz, herself a start-up founder before joining Parliament, told EURACTIV.
While generally welcoming the proposal as “a decisive step towards better conditions for employee shareholding in Germany”, the German start-up association also said it regretted the absence of a simpler tax model for employee shareholding. .
“This would have been a powerful instrument, especially given the international competition for talent,” Christian Miele, president of the association, said in a statement, adding that he hoped for improvements to the law during the parliamentary process.
“We are counting on the members of the German Bundestag. The future financing law will show how seriously the traffic lights (coalition of the SPD, Greens and FDP) take strengthening the location of start-ups,” added Miele.
The new rules also aim to facilitate access to stock market capital for companies not yet listed on the stock exchange by allowing them to create shell companies whose sole objective is to raise capital – like the “Special Purpose Acquisition” model. Companies” (SPAC). in the USA.
“With simpler regulations, we improve companies’ access to the stock market. This will give us an extra boost,” Hubertz said.
However, the German Trade Union Federation, DGB, criticized the bill.
“In the opinion of the DGB, the bill is based on an incorrect assumption: strengthening the financing possibilities of companies on the capital market will not improve the framework conditions for future investments as long as companies primarily serve the interests of shareholders,” says the federation. wrote in a statement in May.
“The recent past shows this: the higher profits of listed companies are not used to finance new investments, but to pay dividends and carry out share buybacks,” the text adds.
(Editing by János Allenbach-Ammann/Alice Taylor)