The new German government presented a comprehensive economic growth initiative on Wednesday to revitalize its declining economy which has experienced two consecutive years of decline. The “growth booster” package received approval from Chancellor Friedrich Merz’s cabinet which includes substantial business investment tax write-offs and a gradual corporate tax reduction from 15% to 10% throughout 2028 to 2032.
The plan requires legislative approval before it can become law. Finance Minister Lars Klingbeil declared that these measures will assist Germany to regain its position as Europe’s leading economy. Businesses can immediately claim tax benefits when they purchase electric cars and conduct research and development activities while new investment incentives will operate for 2½ years.
The business community received the plan positively but demanded additional measures to address Europe’s expensive electricity costs. The economic challenges facing Germany have intensified because of worldwide trade conflicts and decreasing foreign market demand for its manufactured goods.
The government introduced this package to initiate investment growth while preventing an extended economic downturn since economic experts predict zero growth for this year.
