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German Chancellor Olaf Scholz has vowed to boost economic growth by eliminating “bureaucratic corruption” as the German chancellor faces intense pressure to address economic woes that have fueled far-right support.
Schulz on Wednesday called for a “German deal” between Berlin’s government, federal states, city governments and the opposition to revitalize Germany at a time of deep pessimism over sluggish growth and a slow pace of reform.
“Only together will we be able to shake off the bureaucracy, risk aversion and frustration that have been entrenched in our country for years,” he said in a speech to Germany’s Bundestag over the weekend.
Germany has been caught in a wave of national anxiety in recent months after the IMF and OECD warned that Germany would be the slowest-growing of the world’s major economies.
The Kiel Institute for World Economic Research, one of Germany’s top economic research institutes, cut its forecast on Wednesday, blaming “weak industrial activity, a construction crisis and weak consumer spending”, predicting that the German economy will shrink by 0.5% this year. Year. That compares with a 0.3% contraction forecast for the summer.
Scholz, whose three-way “traffic light” coalition with the Greens and Liberal Democrats has been plagued by infighting and slipping polls, said the search for new national momentum was about defending the country from “those who want to win.” people” is the only way. Gaining political advantage from recession and spreading fear”.
It is widely believed to be a reference to the far-right Alternative for Germany (AfD), which has surged in support in recent months, overtaking the chancellor’s Social Democrats (SPD) and ranking No. 1 in national opinion polls. Two, second only to the centrists. – Right-wing opposition Christian Democratic Union.
Uwe Jun, a political scientist at the University of Trier, said Scholz’s call for unity was an attempt to demonstrate leadership at a time when he is under attack for what critics see as a weak governing style.
“The German economy is not doing well, there are fears that a recession is coming, and the popularity of the traffic light union is low,” he said.
Jun warned that Scholz faced an uphill struggle given the scale and scope of the problems facing the country and the difficulty of managing a divided coalition. “It’s a good indication that he’s willing to do it,” he said. “But in the political reality, it will take time (and) there are a lot of problems.”
Adding to the string of bad news, orders from German manufacturers fell at their fastest monthly pace since the outbreak began more than three years ago, although that largely reflected a drop in big-ticket items.
German industrial orders fell 11.7% in July, the biggest drop since April 2020. Excluding large orders worth more than 50 million euros, industrial orders rose 0.3% in July. However, German industrial turnover fell 1% mom in July.
CDU leader Friedrich Merz said the country was “suffocated by bureaucracy” and the current government succeeds Angela Merkel’s CDU in 2021. This bureaucracy was exacerbated by the “Grand Coalition” of the League and the Social Democrats.
Scholz rejected the idea of additional stimulus to boost the economy, saying his government had already spent record amounts, including tens of billions of dollars to support a green transition and chip production.
Instead, he has promised to revive economic growth by speeding up the digitization of online government services and electronic invoicing, two areas where Germany lags behind EU peers, and by making it easier for start-ups to start and grow.
Wolfgang Lemb, a member of the executive board of IG Metall, Germany’s largest trade union, welcomed Scholz’s comments, warning that more than 20,000 additional approvals would have to be issued in the coming years to overhaul industrial and energy networks. Make adjustments. The country’s ambitious green transition.
“With the current planning and approval process, this cannot be done,” he told a business event in Berlin. “Acceleration and digitization are more urgent than ever for Germany’s modernization.”
He said Scholz’s pledge to speed up was good, but added: “Now it has to be concrete.”
Scholz said his government was also addressing underinvestment in the state-owned Deutsche Bahn network, whose frequent train delays have become a source of national anxiety.
The coalition remains committed to building 400,000 new apartments a year, although industry figures warn they expect only half that number to be built in 2023 due to soaring interest rates and construction costs. Scholz plans to ease pressure on the industry with a 7 billion euro corporate tax break package passed last week, which includes new rules on depreciation of builders’ investment costs.
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