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German industry unconvinced by coalition deal

February 7, 2018

Following a breakthrough in Germany's coalition talks, industry and business organizations have warned that measures agreed in the grand coalition deal do not go far enough to make the economy fit for the future.

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Siemens turbines
Image: picture-alliance/dpa/U. Baumgarten

After agreeing in principle on a new coalition deal, Germany's center-right and center-left parties both found themselves in the firing line from business leaders for not showing enough courage to move the country forward economically.

Dieter Kempf, the president of the Federation of German Industry (BDI), said "all in all, industry is not happy with the coalition treaty."

He said that too many resources would simply be redistributed while not enough fresh money would be invested into technology, something seen as key for futureproofing the German economy. He said that the future government's digitalization drive was lackluster and "not a big deal at all."

Kempf also criticized the fact that negotiators in Berlin had not been able to agree on courageous tax breaks and structural reforms, despite a booming economy.

Nothing to write home about

Eric Schweitzer, who heads the Association of German Chambers of Commerce and Industry (DIHK), said Wednesday he "had hoped for more radical decisions" to boost the economy.

He said that while there would be some important investments in future technologies, there would be no corporate tax breaks, "putting Germany at a disadvantage with many other competitors reducing taxes."

BFW, a German lobby group for small-and-medium-sized building companies in the housing sector said the measures foreseen by the coalition partners "will not yield the desired effects," calling the steps to be taken "inefficient long-term."

The plan to invest €2 billion ($2.4 billion) more in affordable housing was only a drop in the ocean, BFW President Andreas Ibel said. "Our affordable housing stock has been going down for a long time, and the additional means to go into it will not be enough to reverse the trend."

Summing up industry's take on the outcome of the coalition talks, Thilo Brodtmann, the managing director of the German Mechanical Engineering Industry Association (VDMA), called the results "half-hearted, lackluster and uninspiring."

Shift - Living in the Digital Age

hg/aos (Reuters, dpa)