Published by Global Banking & Finance Review®
Posted on May 28, 2025
2 min readLast updated: January 23, 2026
Add as preferred source on GoogleGermany's coalition announces tax relief and infrastructure funds to boost the economy amid expected contraction.
BERLIN (Reuters) -The leaders of Germany's ruling coalition parties said they had agreed to pass an immediate action program including tax relief measures and a reduction in electricity tax over the coming months in a bid to jump-start the sluggish economy.
"Things are now moving rapidly," said Chancellor Friedrich Merz, leader of the Christian Democratic Union, after the first meeting of the coalition committee since he took office.
The committee is an informal body made up of the leaders of the governing parties which acts as a hinge between parties, parliamentary groups, and the government, helping to determine the coalition's course and resolve contentious issues.
"Large-scale depreciation will now be possible," he said, referring to measures aimed to encourage businesses to invest more.
Other economic measures include a law to set up the multi-billion euro fund already agreed on for infrastructure, the elimination of a national supply chain law and the acceleration of approvals for energy projects.
The announcement comes the day after the German Chamber of Commerce and Industry said it expects the economy to contract by 0.3% this year, shrinking for a third consecutive year in what would be the longest period of weakness in Germany's post-war history.
“We want to unlock the potential of the people in this country,” said Vice Chancellor and Finance Minister Lars Klingbeil, co-leader of the junior coalition party the Social Democrats.
“We are creating planning security for the citizens of our country and for businesses.”
Social measures include the so-called turbo nationalizations after just 3 years.
On Wednesday, the cabinet had already passed initial laws to limit migration, accelerate broadband expansion and extend the rent cap.
The coalition's proposals are expected to be adopted by the cabinet by around September. Some could become law as early as summer, Merz said.
(Reporting by Markus Wacket and Sarah Marsh; Editing by Sandra Maler)
The coalition has agreed to an immediate action program that includes tax relief measures and a reduction in electricity tax.
Chancellor Friedrich Merz stated that 'things are now moving rapidly' following the first meeting of the coalition committee since he took office.
The German Chamber of Commerce and Industry expects the economy to contract by 0.3% this year, marking a third consecutive year of economic shrinkage.
Proposed measures include large-scale depreciation to encourage businesses to invest more and the establishment of a multi-billion euro fund for infrastructure.
The coalition's proposals are expected to be adopted by the cabinet around September, with some measures potentially becoming law as early as summer.
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