Economic Policy Tops Coalition Agenda as CDU and SPD Seek Reform Momentum

Germany's governing coalition convened a high-level meeting in Berlin to address pressing economic challenges facing the country. The coalition, led by Chancellor Friedrich Merz, is focusing on strategies to stimulate growth and provide relief for businesses amid persistent concerns over sluggish economic performance.

Key topics under discussion include the potential adoption of an industrial electricity price to support energy-intensive industries and the introduction of new gas-fired power plants to ensure affordable energy supply. Coalition leaders have indicated that these measures are targeted at reducing operational costs for businesses, particularly in the manufacturing and mid-sized sectors, which have been affected by elevated energy prices.

In addition to energy policy, the coalition is considering the establishment of a state-backed investment fund, known as the 'Deutschlandfonds.' This initiative would allocate at least ten billion euros to strengthen small and medium-sized enterprises (SMEs) and foster the growth of promising start-ups. The fund aims to provide financial support to innovative companies and enhance Germany's competitiveness in key industries.

Another significant issue on the coalition's agenda is the ongoing debate regarding the future of combustion engine vehicles. The Christian Social Union (CSU) has called for a reassessment of the scheduled phase-out of new combustion engine car registrations by 2035, citing concerns over regulatory clarity and the potential impact on the automotive sector. The CSU is urging coalition partners to reconsider the current EU regulations and work towards a solution that balances climate objectives with industrial interests.

Pension reform also remains a contentious topic. While a proposal to secure pension levels until 2031 has been introduced, there is ongoing debate within the coalition over the specifics of the plan. Some members are seeking further negotiations, while others advocate for an immediate resolution to provide stability for retirees and workers.

Since assuming office earlier this year, the coalition has implemented several measures designed to stimulate the economy. These include tax incentives for corporate investment, increased tax deductions for commuters, and temporary tax reductions for the hospitality sector. Economic sentiment, however, remains cautious, with industry leaders expressing uncertainty about the prospects for comprehensive structural reforms in the near future.

The outcomes of the coalition meeting are being closely watched, as any decisions made are expected to set the direction for Germany's economic policy in the coming months. The government aims to demonstrate unity and resolve in addressing economic challenges, with further details anticipated during an upcoming press conference featuring the Chancellor and key coalition representatives.