The German coalition government is poised to unveil a new package of economic stimulus measures this Thursday, intended to mitigate the ongoing economic downturn. The proposals, reportedly focusing on easing the burden on energy-intensive industries and small-to-medium-sized enterprises (SMEs), are being framed as a necessary response to persistent economic headwinds.
According to Jens Spahn, parliamentary group leader of the Christian Union (CDU/CSU), a key element of the planned intervention will be the introduction of an industrial electricity price, alongside a potential reactivation of gas-fired power plants to ensure affordable energy supply. Speaking to “The Tagesspiegel”, Spahn acknowledged the palpable frustration surrounding the government’s economic performance thus far. He cautioned that “it takes time for changes to become visibly felt in everyday life.
While the coalition has previously enacted measures such as corporate tax reductions and bureaucratic streamlining, their impact remains limited, as highlighted by Spahn’s own admission regarding the sluggish housing market, despite pledged construction acceleration initiatives. Describing the existing coalition agreement as an “immediate program” for the first year in government, Spahn indicated a willingness to evolve policies beyond its original scope.
A topic anticipated to contribute significantly to the economic debate and potentially influence future reforms is the considerable level of social security contributions currently levied at 42.5% of gross salaries. Spahn identified this as “a significant burden” on businesses, signalling a commitment to social security reform pending a comprehensive evaluation from dedicated commissions, a process expected to dominate the first half of 2026.
However, fundamental disagreements surrounding proposed pension reforms are proving a significant obstacle to swift action. Internal dissent within the CDU/CSU, with younger members expressing concerns about the long-term financial impact on future generations, threatens to derail progress. Chancellor Scholz has already indicated further discussion within the coalition is needed and a rapid resolution appears unlikely. The cautious approach reflects a broader strategy of managing expectations and acknowledging the complexities inherent in addressing Germany’s structural economic challenges. The upcoming measures and subsequent reforms will be crucial tests of the coalition’s ability to effectively navigate a period of economic uncertainty and maintain public confidence.