On Tuesday, Chancellor Olaf Scholz announced a sweeping plan to revive Germany’s economic activity, which is more ambitious than expected, especially in terms of taxation, but which has struggled to convince the business community, AFP reported.

Fears of economic decline dominated Europe’s leading economies in the fall and put Olaf Scholz’s government under pressure.

According to the IMF, the former EU state will be the only major industrialized country to survive a recession in 2023.

“Therefore, it is very important that in this situation we launch an offensive by the federal government to stimulate growth in our country,” the chancellor stressed at a press briefing at Meseberg Castle near Berlin, where the coalition government is meeting. two-day seminar.

We need to “make sure that all companies make their own decisions (…) about investment and growth opportunities for our country,” he added.

A 10-point plan. The main news

His coalition government, which brings together a motley group of social democrats, greens and liberals, agreed on a 10-point recovery program that will be formally adopted by the Council of Ministers on Wednesday.

Key innovations include an important package of tax breaks worth more than €7 billion a year until 2028, up from around €5.7 billion planned earlier.

The package of tax benefits is particularly aimed at SMEs in the form of accelerated depreciation and investment bonuses.

It also includes a housing depreciation scheme of 6% per annum to help the construction sector, which is suffering from high interest rates.

A complete collapse of the construction sector would jeopardize the capacity the country urgently needs and exacerbate social problems in the housing market, according to a document detailing the government’s plan.

Another key measure will allow companies to better offset past losses with future profits. They should now be able to offset “80 percent of losses over a four-year period,” up from the usual 60 percent, Liberal Finance Minister Christian Lindner explained at the same news conference.

In addition, tax incentives for research and development will be improved.

Subsidized energy prices

Access to capital markets for start-ups will also be facilitated by measures worth one billion euros.

It also aims to support the climate-friendly modernization of the economy in the construction and transport sectors through a €211 billion fund that has already been announced.

The government plan also aims to reduce the bureaucratic burden of obtaining building permits through the use of artificial intelligence.

Berlin is also counting on the quick passage of a bill on skilled immigration, which is supposed to solve the problem of labor shortages and has not yet been voted on in parliament.

The industry has been hit hard by rising energy prices after Russia’s war in Ukraine.

The coalition wants to finally guarantee businesses an affordable supply of energy at subsidized prices that will not remain constant.