Germany's Coalition Commitment: Reviving Europe's Economic Giant

German conservatives led by Friedrich Merz have reached a coalition agreement with the SPD to stimulate economic growth across Germany. Key initiatives include international trade deals, energy reform through lowered electricity costs, restructuring tax laws, and ambitious environmental goals aiming for a 90% emissions reduction by 2040.

Germany's conservative leadership under Friedrich Merz has entered into a coalition with the Social Democrats to strategically boost Europe's largest economy. Announced on Wednesday, their agreement is a roadmap for growth through significant policy changes.

Central to this coalition is the pursuit of a transatlantic free trade agreement with the U.S. to strengthen economic ties, alongside EU-level trade pacts with Mercosur, Mexico, India, and others. The government's agenda includes reducing electricity costs through tax and fee cuts, and encouraging up to 20 gigawatts of new gas power plant capacity by 2030, while supporting carbon capture technologies.

Reforms go further, with corporate tax reductions planned over five years starting from 2028, and permanent cuts to VAT in restaurants by 2026. Labour incentives include tax benefits for retirees and a minimum wage increase. The coalition also pledges increased military spending, stricter migration controls, and ambitious climate targets to cut emissions by a remarkable 90% by 2040.

(With inputs from agencies.)