German Economy Minister Robert Habeck described the economic situation in his country as unsatisfactory, while his compatriot, Finance Minister Christian Londoner, considered his country’s economic path unsatisfactory and witnessing structural change and losing competitiveness.
Habeck said, today, Monday, from the capital, Berlin, that stimulating investments would benefit in the short term, explaining that stimulating the economy is what the government seeks through the “growth initiative.”
He added that the German states must support this initiative and strive to stimulate the economy, explaining that the states must approve plans to improve tax reduction, as the initiative is linked to reducing tax revenues.
Habeck said that the most important thing is to release the debt brakes now, in light of the adjustment of economic expectations to the lower, describing the economic situation as very volatile.
He confirmed that the German government would lower its economic forecasts.
The German newspaper “Süddeutsche Zeitung” reported that Habeck expected a contraction in the gross domestic product in the fall forecasts that will be announced the day after tomorrow, Wednesday.
Habeck had originally expected a slight increase in GDP of 0.3% for 2024, and a contraction of 0.2% is now expected.
For 2025, Habeck expects an increase in GDP of 1.1%.
In a related context, German Finance Minister Christian Lindner today expressed his dissatisfaction with his country’s economic performance. “The German economy is treading water – we cannot be complacent,” he told reporters in Luxembourg. “We are witnessing structural change coupled with a loss of competitiveness.”
Germany has failed to achieve economic growth in two consecutive quarters since Olaf Scholz’s government took office in late 2021. Lindner spoke at the start of a pivotal week of economic data, which had already started on a negative note with horrific numbers for factory orders.
Industrial production figures are due on Tuesday, followed the next day by the latest economic forecasts from the government, which are due to be revised to a 2024 contraction.
“Our economic model is not broken but we have lost competitiveness for about a decade, so we are introducing supply-side measures to return to growth,” Lindner said.
He added, “We need to improve economic performance, as we focus on mobilizing the labor market, taxes and benefits, and we have to partially reconsider our energy policies.”
Lindner stressed that Germany, “after this reform agenda, will be more competitive again, and then you will see that there is the possibility of transformation.”
