Press Releases

September 13 , 2007

Chancellor Merkel: Economic Recovery Must be Founded on Confidence

The German government aims to strengthen the foundations for economic recovery and enable everybody to benefit from the robust economic development the country is enjoying. Chancellor Angela Merkel emphasized this during the debate in the German Bundestag on the budget on September 12. Alongside the budget consolidation, which is essential, the aim must now to be to tap sources of new prosperity. "Germany has every reason to look forward to the future with confidence, but we cannot afford to rest on our laurels," declared Merkel.

The positive development of the economy, the lowest unemployment for twelve years, higher tax revenue and a decline in new debts are all signs that the strategy of the German government (Invest, Restructure, Reform) is beginning to bite. However, there is still a lot to be done, especially on the labour market. As Merkel put it, "3.7 million unemployed are still 3.7 million too many."

So as to strengthen the continued positive economic recovery, the government is planning to lend impetus to forward-looking sectors. The upswing must be strengthened, all citizens must benefit from recovery, and investment must set the scene for the future. This is how the Chancellor outlined her plans for the second half of her term of office.

At the international level, the German government is working to put in place the social market economy as an effective enabling environment. The Chancellor is convinced that this will help strengthen cohesion and solidarity during this time of dramatic change.

Strengthening the foundations of economic recovery

During the debate on the 2008 budget, the Chancellor unequivocally pledged to further consolidate the budget while continuing to invest in the future: "900 billion euros debt for the national government and 40 billion in interest payments every year are simply unacceptable," she declared. The government aims to invest in research projects and technologies that will underpin economic recovery in the long term. The financial burden borne by citizens can only be lightened where this is compatible with our responsibilities, Merkel continued. She did, however, promise that, "where the government has leeway to do so, it will make use of it."

One day earlier, the Federal Minister of Finance had already clearly stated that the additional tax revenues will be used primarily to reduce the national debt.

With its reform of company taxes and the planned reform of inheritance tax, the German government is also working to improve the terms of competition, and thus set the scene for consistent growth, especially for small and medium-sized businesses, as the Chancellor stressed. The newly formed standards monitoring council, for instance, will help cut unnecessary red tape for businesses.

Participation through education and training

"We want all citizens to benefit from economic recovery," the Chancellor stated clearly. The key to prosperity is education and training, today more than ever before. This is why the German government is placing its faith in a national education offensive. When skilled workers are scarce, we aim first to mobilize the workforce we already have in the country, she explained.

Merkel also announced to the parliament that she aimed to get the workforce more involved in their companies in economic terms. "We will find new ways of involving the workforce in investment capital," she stated, "because this gives them the opportunity to share in the growth of their companies."

To tap the "sources of prosperity tomorrow," the German government is also working to put three percent of GDP into research and development. The current economic growth, however, means that the sums involved are rising consistently, the Chancellor reminded her audience.

Work for all!

"If you have read Ludwig Erhard, then you will know that growth is not an end in itself," underlined Merkel. As head of government it is her goal, she continued, to see a free, safe Germany with socially acceptable conditions. In times of radical change, in particular, cohesion and solidarity are needed. We can only afford these, though, if the social welfare system functions properly, she said.

"Work is thus the key to further social cohesion," stated the Chancellor. To give well-trained and highly educated young women the chance to work, a sufficient number of daycare places for children under three years of age is to be created by 2013. "At present families have no genuine choice," according to the Chancellor. As soon as the availability of daycare places gives them a chance to choose, it is then up to mothers and fathers to decide whether or not to bring up their children at home.
International: Joining forces to protect the climate and ensure transparent markets

The fact that budget policy is today no longer only domestic policy became clear when the Chancellor came to climate protection. "We cannot preach to the poor in our world that they should forego prosperity. We must be a good example in the field of climate protection," Merkel underlined. The new technologies required entail not only costs. They also offer major opportunities for German businesses.

The Chancellor aims to make the social market economy the international framework, because the interrelations and dependences in our global work are becoming closer and closer. "If the Chinese drink more milk, or a mortgage crisis breaks out in the USA, we feel the impacts on our national markets," Merkel pointed out. Markets must then be able to respond more effectively than is currently possible.

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