German Chancellor Olaf Scholz promised on Tuesday to boost investment, attract skilled workers and cut red tape to revive growth in Europeโs biggest economy, which is on track to contract for the second straight year.
Blaming inflation, high interest rates and geopolitical conflicts, Scholz also criticized the European Union, saying red tape was holding up investment and he urged Brussels to take drastic action.
โTogether, we have to get out of this bad situation where bad figures lead to bad sentiment โ and bad sentiment leads to even worse figures,โ Scholz told a conference of the BDA employersโ association.
โWe need more growth. The pie has to get bigger again,โ he said, adding his planned growth initiative aimed to cut bureaucracy, offer incentives for investment and ensure energy was affordable and sustainable.
He stressed the importance of bringing more skilled workers into the job market, including from abroad, and creating more flexibility with working hours and the pension age.
Earlier this month, the economy ministry cut its economic forecast, saying it expected a 0.2% contraction this year, compared with a previous projection of 0.3% growth, underscoring Germany’s place as a laggard among the Group of Seven major economies.
The export-oriented economy is having to adjust after benefiting for decades from cheap energy from Russia for industry. Germany has weaned itself off since Moscowโs full-scale invasion of Ukraine and is turning to alternatives.
Scholz also said the government, made up of his Social Democrats, the Greens and the pro-business Free Democrats, aimed to strengthen Germany as a financial center and that it was crucial for the European Commission to complete the capital market union.
On EU bureaucracy, he said Brussels was right to ensure that common rules apply in the internal market.
โBut some things have come out of this that make you wonder,โ he said, citing conditions on sustainability set out by the European Commission, adding Brussels had to โfinally cut bureaucracy on a large scale.โ
(Reporting by Andreas Rinke, Writing by Rachel More and Madeline Chambers, Editing by Hugh Lawson)
