German Bundestag passes law against economic downturn
Published: Friday, Nov 17th 2023, 12:50
Updated At: Friday, Nov 17th 2023, 12:53
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The German economy is weakening. The German government wants to change this with the Growth Opportunities Act. The traffic light coalition must expect fierce resistance in the state parliament.
The Bundestag has passed a package of measures to boost the sluggish German economy. The so-called Growth Opportunities Act of the traffic light coalition provides for tax relief for companies until 2028 and an acceleration of approval procedures.
The relief is to amount to seven billion euros annually. The law was passed with the votes of the SPD, Greens and FDP parliamentary groups. The opposition CDU/CSU, Left Party and AfD voted unanimously against it because they consider the measures to be largely ineffective.
Investing in climate protection
The key point is a premium for investments in climate protection. 15 percent of expenditure on energy efficiency measures by companies is to be subsidized as direct financial support. The law also includes tax incentives to boost the crisis-ridden housing construction sector. Additional tax incentives for more research are also planned.
The law must now be approved by the Federal Council. However, it has met with clear criticism from the federal states. They complain that they and the local authorities would have to bear two thirds of the tax relief. The law is therefore likely to go to the mediation committee of the Bundestag and Bundesrat.
Boosting the economy again
Germany is in recession. The German government and the leading economic research institutes expect economic output to fall by 0.4% to 0.6% this year. The German Council of Economic Experts assumes that things will only slowly pick up again next year.
During the debate, SPD finance politician Michael Schrodi emphasized: "With the global minimum tax, the Future Financing Act and now the Growth Opportunities Act, we have set the right course for growth, prosperity and social justice." The law will "significantly strengthen the competitiveness of Germany as a business location", assured his parliamentary group colleague Frauke Heiligenstadt.
It sets important priorities for investment impulses, said Katharina Beck, financial policy spokesperson for the Greens. FDP finance politician Maximilian Mordhorst said: "I believe we are passing a really good law here today."
Opposition criticizes law
However, the opposition denied this. The German government should actually be encouraging investment now if it wants to get the economy moving, explained the deputy chairman of the CDU/CSU parliamentary group, Mathias Middelberg. "At best, this law makes a minimal contribution to this, which is more likely to be on a micro scale." The CDU politician referred to an analysis by the German Economic Institute, according to which annual growth would increase by just 0.05 percent as a result of the Growth Opportunities Act.
AfD politician Kay Gottschalk therefore spoke of a "missed opportunity law" that was not worth the paper it was written on. Left-wing finance politician Christian Görke did see "a few sensible regulations", as he said. "But overall, your law is an ill-conceived, inefficient and ineffective conglomeration of very different measures."
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