Germany unveils relief measures to prop up construction industry

German Chancellor Olaf Scholz's government said it was shelving proposed building regulations on Monday as part of a 45 billion euro ($47 billion) relief package to prop up a construction industry stricken by high interest rates and rising costs. Berlin will make 18 billion euros available until 2027 for affordable housing, with the rest of the funding coming from federal states and municipalities.

German Chancellor Olaf Scholz's government said it was shelving proposed building regulations on Monday as part of a 45 billion euro ($47 billion) relief package to prop up a construction industry stricken by high interest rates and rising costs.

Berlin will make 18 billion euros available until 2027 for affordable housing, with the rest of the funding coming from federal states and municipalities. The government has also put on indefinite hold plans to require more stringent building insulation standards, an effort to help prop up the ailing building industry.

Abolition of the insulation standards has been a top demand of industry, which says the measures are too expensive. "We must massively expand activities in housing construction," Scholz said ahead of talks between the building industry and government leaders to address a major slump in the sector. "We need more affordable housing."

Scholz also backed the European Central Bank (ECB) raising interest rates to fight inflation, but said that such moves were also inhibiting housing construction. The chancellor said the government is exploring the option of serial construction to speed up the process, a production method used in other sectors, like the automotive industry.

"We, the federal government and the 16 states, the many municipalities in Germany, must create the prerequisites by making it possible for this to happen with certain standards and always adapted to each specific situation," Scholz said. Another of the issues for the building industry is the construction backlog, according to the chancellor, with many flats already approved and waiting to be built.

With a separate Growth Opportunities Act, which the government passed earlier this year, Scholz said the government aims to offer better depreciation options for the housing industry so that these planned flats are built quickly. ($1 = 0.9414 euros)

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