Germany to get ‘investment booster’ before summer break

German Finance Minister Lars Klingbeil promised swift measures to boost investment on Tuesday amid global trade uncertainty.

“It is right that we will launch an investment booster before the summer break, which can be the right and fastest-acting response to the reluctance to invest,” he said at the Eastern German Economic Forum in Berlin.

Germany was the only member of the G7 advanced economies that failed to grow for the last two years, and tariffs announced by US President Donald Trump will deal a major blow to its export-oriented economy.

As part of government measures to revive growth, Klingbeil mentioned tax reforms, depreciation allowances of 30 per cent over the next three years, and a 500 million euro ($562.2 million) infrastructure fund that he called “the largest modernisation effort in decades”.

The government has also pledged to reduce the bureaucratic burden, aiming to cut administrative costs by 25 pre cent and compliance expenses by 10 billion euros through a “one in, two out” rule for new regulations.

“Probably you’re all thinking right now, this is not the first politician to express such a goal of reducing bureaucracy costs, and you’re right, we will be measured by this.”

He said the new coalition had a “historical responsibility” to return the German economy to growth.

“If we don’t manage to make life simpler again for companies and people in this country, then those who might question the rule of law might come,” Klingbeil said, in reference to the rise in polls of the extreme right party Alternative for Germany (AfD).

European stocks edged higher on Tuesday, with utilities and telecom firms leading gains as investors awaited updates on US tariff policy that has raised concerns about health of the global economy. The pan-European STOXX 600 index rose 0.4 per cent by 0851 GMT, hovering at a seven-week high.

The German DAX, up 0.2 per cent, touched a record high, while Spain’s IBEX was trading at its highest since 2008.

Utilities rose 1.5 per cent, with Portugal’s EDP ​​Renovaveis climbing 3.5 per cent after Deutsche Bank upgraded the stock to “buy” from “hold.”

Shares of offshore wind power developers Oersted jumped 13.3 per cent and Vestas Wind gained 4 per cent after US President Donald Trump’s administration lifted a month-old stop-work order on a major offshore wind facility planned off the coast of New York. Broader markets also stabilised after a surprise downgrade by Moody’s on US sovereign credit late on Friday sapped risk appetite. Investors are also awaiting any trade deals, with Trump’s reciprocal tariffs set to kick in again in early July.

“We still think that the path of least resistance would be higher for risky assets in the near term,” Mohit Kumar, economist at Jefferies, noted.

“That’s not because we are constructive on the macro picture, but because we believe that investors are still underinvested and there’s cash sitting on the sidelines.”

Agencies