Government plans 500 billion euros for economic recovery!

Government plans 500 billion euros for economic recovery!

The new governing coalition in Germany is about to launch a comprehensive economic relief plan to combat the current economic downturn. Loud it-boltwise.de The coalition aims to boost investment through tax incentives and a new investment program called “Investment Booster”. Chancellor Friedrich Merz announced that concrete steps would be presented by the summer holidays.

A central element of this strategy is the introduction of improved depreciation options for companies in order to create incentives for investments. In addition, the aim is to reduce bureaucracy in order to optimize the framework conditions for companies. The coalition plans to create a loan-financed special fund worth 500 billion euros that will be dedicated to both infrastructure modernization and climate protection.

Concrete measures and incentives

SPD leader Lars Klingbeil has announced an immediate program, while CSU leader Markus Söder is pushing for rapid progress. Part of the coalition agreement is also the reduction of electricity tax in order to counteract the high energy costs and lengthy approval procedures. Economists are predicting stagnation in gross domestic product this year, increasing pressure on the coalition.

The federal government is planning how to federalgovernment.de to announce the special fund of 500 billion euros for modernizing the infrastructure, which will also flow into the transition to climate neutrality. There will be a tax relief and investment incentives program to encourage both private and public investment.

Reducing bureaucracy and digitalization

Another key goal of the coalition is to reduce bureaucracy, which will be driven forward in part by an immediate program from 2025. Reducing and simplifying rules and documentation requirements could reduce bureaucratic costs for the economy by around 16 billion euros. In addition, a digitalization offensive is being launched to make administrative processes more efficient.

The tax relief measures include, among other things, a degressive depreciation of 30% on equipment investments between 2025 and 2027 as well as a planned gradual reduction in corporate tax from 2028. Relief is planned for citizens, such as a reduction in income tax for small and medium incomes in the middle of the legislative period, as well as an increase in the commuter allowance.

Financial stability and outlook

Despite the ambitious plans, all measures will be subject to financing. From 2025, the federal government is planning a review process of its spending in order to reduce administrative spending by 9% and the number of positions in the federal administration by 8% by 2029. In the long term, the combination of tax incentives, reductions in bureaucracy and investments are intended to provide sustainable stimulus that could have far-reaching effects on the German economy.

Overall, the new government coalition is faced with the challenge of setting the course for strengthening the economy, while at the same time the gender distribution in the coalition committee is being criticized. With currently 10 male and only 1 female members, fair representation is obviously not given. Despite this criticism, Merz emphasizes the positive atmosphere in the consultations.