2024-08-07 19:39:36
The German economy shrank in the first quarter. FDP General Djir-Sarai is now taking economics minister Habeck to task.
In view of the recent contraction of the German economy, FDP General Secretary Bijan Djir-Sarai is calling on Economics Minister Robert Habeck (Greens) to improve the framework conditions for companies in Germany as quickly as possible. Overall, more speed is needed in implementing the latest decisions of the traffic light coalition for more growth.
“We need to accelerate the economic turnaround, because the current figures on the development of the German economy are alarming,” Djir-Sarai told t-online on Tuesday. “Economics Minister Habeck must finally recognize that the economic turbo must be ignited as quickly as possible.” Germany needs a “growth-friendly policy with targeted, clear and permanent relief for the working middle class” and for companies, so that there is more private investment.
“Without decisive structural reforms in taxes, levies and the welfare state as a whole, the German economy will not be competitive,” continued Djir-Sarai. “And without a competitive economy, the state will also increasingly lose its ability to act.”
The German economy unexpectedly shrank in the second quarter. Gross domestic product fell by 0.1 percent from April to June compared to the previous quarter, the Federal Statistical Office announced on Tuesday. Investments in equipment such as machinery and in buildings in particular decreased. Economists surveyed by the Reuters news agency, however, had expected growth of 0.1 percent. In the first quarter, growth of 0.2 percent was still sufficient.
This means that Germany is lagging behind other large eurozone countries. By comparison, France managed an increase of 0.3 percent in the spring, and Spain even managed an increase of 0.8 percent.
The prospects for an upturn in the second half of the year have recently become cloudy. The Ifo business climate index – which is considered the most important leading indicator for Europe’s largest economy – fell in July for the third month in a row. “The German economy is stuck in the crisis,” said Ifo President Clemens Fuest.
In contrast, the mood among consumers has recently brightened noticeably – also due to the European Football Championship in their own country. The willingness to make major purchases is greater than it has been since March 2022, as consumer researchers at GfK and the Nuremberg Institute for Market Decisions (NIM) found in their survey. Recently, real wages have risen again more sharply because inflation has eased and earnings have increased significantly.
In June, the inflation rate was 2.2 percent compared to the same month last year, compared to 2.4 percent in May. This means that the rate is approaching what the European Central Bank (ECB) has set as the target for its monetary policy: in the medium term, inflation in the entire eurozone should settle at around 2 percent per year.
FDP man Djir-Sarai is nevertheless concerned about inflation. “Inflation remains at too high a level,” he said. “That is why the Minister of Economic Affairs in particular must vigorously develop the agreed growth initiative in order to quickly make Germany fit as a business location while complying with the debt brake as an inflation brake.”
The “Growth Initiative” is a project of the traffic light government that Habeck developed together with Chancellor Olaf Scholz (SPD) and Finance Minister Christian Lindner (FDP) in parallel with the draft budget for the coming year. The package includes a total of 49 individual measures intended to stimulate the economy, including tax relief, improved depreciation options and reducing bureaucracy.
The traffic light coalition hopes that the package will provide a noticeable stimulus for growth: next year, according to calculations, economic growth will be 0.5 percentage points higher as a result of the measures than without the legal changes and relief measures.
However, economic researchers are skeptical that this plan will work. Recently, the chairwoman of the five economic experts who advise the federal government on economic issues, Monika Schnitzer, said in an interview with t-online: Many of the planned measures are indeed going in the right direction. “But all of these measures will hardly be able to bring about 0.5 percent more growth in the short term; that is not very realistic. The financial scope of the relief for companies is too small for that.”