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Germany's new coalition seeks to boost economy amid trade war threats
Published by Global Banking & Finance Review®
Posted on April 9, 2025
3 min readLast updated: January 24, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on April 9, 2025
3 min readLast updated: January 24, 2026
Germany's coalition government introduces economic reforms to boost growth amid global trade war threats, focusing on infrastructure and tax policies.
By Maria Martinez
BERLIN (Reuters) - Germany's new coalition government unveiled economic and tax reforms aimed at bringing Europe's largest economy back to growth just as a global trade war threatens recession.
Here are a range of economists' views on the coalition deal.
COMMENTS:
CARSTEN BRZESKI, GLOBAL HEAD OF MACRO AT ING:
"When looking at economic policy, it is primarily a wish list, with many good elements, but that will most likely fail due to financial feasibility. Many good elements, but also many short-term elements, the effect of which can quickly fizzle out."
"The positive thing is that Germany is getting a new government just over two months after the election. The economic problems also seem to have been recognised."
JENS SUEDEKUM, PROFESSOR FOR INTERNATIONAL ECONOMICS AT HEINRICH-HEINE UNIVERSITY IN DUESSELDORF:
"Tax cuts in the area of income and corporate tax will only come with delay and in small steps. They are subject to a financing reservation and can only be implemented when growth and thus tax revenues pick up again."
"Instead of lower tax rates, however, there will immediately be better depreciation rules to specifically stimulate investments. This is an important signal."
"It is regrettable that various new expenditures made it into the coalition agreement, which are purely consumptive - such as the expansion of the mother's pension, subsidies for agricultural diesel, or the reduction of VAT in the gastronomy sector."
JOERG KRAEMER, CHIEF ECONOMIST AT COMMERZBANK:
"Positively, there are no tax increases, but corporate taxes are supposed to slightly decrease in the medium term. The abolition of the German supply chain law should also help companies. In addition, there could be a certain acceleration of infrastructure projects. Electricity costs will decrease somewhat."
"All of this is going in the right direction, but it is not a real restart in economic policy that would be necessary in view of the competitiveness that has been eroding for years. However, more was not to be expected, because the future coalition partners have different economic policy ideas."
MONIKA SCHNITZER, HEAD OF THE GERMAN COUNCIL OF ECONOMIC EXPERTS:
"It's good that the coalition partners were able to agree on a coalition agreement so quickly. This is right and important given global economic developments."
"The abolition of the national supply chain law sends a signal for bureaucracy reduction. However, there is still a lot to do for the bureaucracy reduction demanded by everyone."
"What is missing is the urgently needed pension reform to keep the pension system financially viable. Instead, the foreseeable financial imbalance of the pension system is increased by the increase in the mother's pension and the adherence to the pension level."
ROBIN WINKLER, CHIEF ECONOMIST FOR GERMANY AT DEUTSCHE BANK:
"Indeed, the coalition agreement lacks some structural reforms that one would have wished for as an economist, not least in the pension system. But in these stormy times, we finally need a capable federal government again."
"This government now has to take responsibility not only in Europe and the world. The new government also has to shift into implementation mode in Germany to prevent the economy from greater damage. The agreed infrastructure investments need to be launched as quickly as possible to cushion the impending trade shock and to prevent a third consecutive year of recession."
(Reporting by Maria Martinez and Rene Wagner; Editing by Ludwig Burger and Toby Chopra)
The article discusses Germany's coalition government's economic reforms amid global trade war threats.
Key reforms include tax changes, infrastructure investments, and depreciation rules to stimulate growth.
Experts are concerned about financial feasibility and the lack of structural reforms, especially in the pension system.
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