Merz Unveils New Stimulus Package to Revive German Economy

The German government, led by Chancellor Friedrich Merz, has approved a €46 billion economic package titled the “Growth Booster” aimed at strengthening the country’s economy. The package includes a range of tax exemptions and reductions designed to encourage companies to invest in modern technologies, digitalization, and green innovations.
Under the plan, investments in new machinery and equipment made between 2025 and 2027 will be eligible for a 30% tax deduction. Additionally, the government intends to gradually reduce the corporate tax rate from the current 15% to 10% by the end of 2029. Investments in electric vehicles, research and development, and digital infrastructure will also benefit from tax incentives.
Lars Klingbeil, Germany’s Finance Minister, stated that the purpose of the package is to stimulate domestic investment and restore momentum to the country’s industrial economy. He described the plan as part of the government’s long-term roadmap to restore Germany’s competitive edge on the global stage and added that, in addition to financial incentives, comprehensive regulatory reforms and bureaucratic simplification are also on the agenda.
Economic experts have welcomed the initiative as a positive signal. Holger Schmieding, chief economist at Berenberg Bank, emphasized the importance of the package in restoring market confidence, noting, “This is just the beginning. Cutting red tape and simplifying regulations, alongside tax relief, can transform the business environment.”
The “Growth Booster” package, together with over €1 trillion in planned public investments in transport, renewable energy, and digitalization, forms a key part of the Merz government’s approach to addressing Germany’s structural economic challenges in the coming decade.
Source: AP/ FT