Economic news

Germany’s economic model is not broken, finance minister says

2024.10.07 10:27

By Maria Martinez

LUXEMBOURG (Reuters) -Germany’s economic model is not broken but Europe’s biggest economy has lost competitiveness over the past decade, German Finance Minister Christian Lindner said on Monday.

“We can’t be satisfied with the economic developments in Germany,” he told journalists ahead of a Eurogroup meeting.

The German economy is expected to contract by 0.2% in 2024, an economy ministry spokesperson said on Monday, cutting the forecast from a previous projection of 0.3% growth this year.

If realised, this would be the second consecutive year of contraction for Germany’s economy, which was the weakest among its large euro zone peers last year with a 0.3% decline in gross domestic product.

Lindner said the government was introducing supply-side measures to try to return the economy to growth.

“After these reforms, Germany will have more competitiveness again,” Lindner said, adding that the growth initiative was just a first step for an economic turnaround, “but we have to build on it.”

AMBITION NEEDED

Lindner said “ambition” was needed to keep EU public finances in order, or to put them back in order where necessary.

“I can only encourage everyone to implement structural reforms and to make unpopular decisions,” Lindner said. “What seems to be unpopular at the moment is the willingness to take responsibility for the next generation and for the stability of the European Union as a whole.”

Lindner said he could not comment on the French budget plans because he had not had the chance to talk with his French colleagues yet, but he would do so on Monday evening.

© Reuters. FILE PHOTO: German Finance Minister Christian Lindner looks on, on the day he answers questions from lawmakers on the potential takeover of Commerzbank by UniCredit during a plenum session of the lower house of parliament Bundestag, in Berlin, Germany, September 25, 2024. REUTERS/Liesa Johannssen/File Photo

“We should all realise that the credibility of public finances vis-à-vis the capital markets is not to be trifled with,” Lindner said.

“We must credibly reduce our deficits and our debt so that we can continue to finance ourselves well and in a stable manner.”



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