Germany needs sweeping reform to regain competitiveness, minister says

BERLIN (Reuters) -Germany must undertake sweeping reforms to regain its economic competitiveness, Economy Minister Katherina Reiche said on Monday, warning that the country is mired in a structural crisis.

"The situation is serious," Reiche said in a keynote speech in Berlin, adding that Germany had fallen behind internationally. 

Though the stagnant German economy is likely to regain some momentum over the next two years, Reiche said this recovery would largely be driven by government plans to sharply increase spending on infrastructure and defence.

Critics have argued that the reforms by the conservative-led government of Chancellor Friedrich Merz are slower and less far-reaching than initially expected.

In her keynote, Reiche ruled out a quick return to export-led growth and called for modernisation of the state apparatus, fewer regulations for businesses, and tighter controls on public debt.

Reiche also urged a market-oriented energy policy, noting German firms pay up to five times more for gas than their U.S. counterparts. 

(Reporting by Christian Kraemer, Writing by Friederike Heine, editing by Thomas Escritt)