German government has proposed an economic growth initiative

The BDI industry association notes that the economic package provides only modest incentives

Last week, the German government officially adopted the draft budget for 2025 along with a package of measures called the Wachstumsinitiative, Euractiv reports.

A total of 49 measures were agreed upon as part of the Growth Initiative, including tax incentives for private investment and the attraction of skilled foreign workers, cutting bureaucracy, plans to create backup capacity for renewable energy, and easing the burden of high electricity prices for energy-intensive companies.

Minister of Economic Affairs and Climate Protection Robert Habeck expects additional economic growth of 0.6% from the presented economic package, which also entails higher expected tax revenues to the federal budget next year.

The economic initiative has caused some controversy even within the government coalition, in particular, due to the planned tax break for skilled foreign workers.

Germany will also insist on a number of measures at the EU level, citing support for the country’s strong export sector. For example, the country will lobby the European Commission to reduce the broad requirements for the content of reports under the Corporate Sustainability Reporting Directive (CSRD).

The individual legislative measures are yet to be developed by the responsible ministries.

At the same time, the German industrial association BDI expects only a “slight” increase from the economic package approved by the country’s coalition government. According to BDI CEO Tanya Gönner, even if the agreed measures pass the German parliament and are implemented without changes, the stimulus will be moderate. However, some structural reforms are likely to improve the situation only slightly.

In late May this year, the German government approved two bills aimed at accelerating the integration of hydrogen and carbon capture technologies into the country’s energy and industrial systems. Both areas have been identified as critical components of the country’s ambition to become carbon neutral by 2045, while preserving its heavy industry.