East German Economic Forum | Federal Minister announces "relief package"

From politics directly into business and back: This is the path taken by Katherina Reiche. The CDU politician has been Federal Minister of Economics for two weeks and arrived on Monday for a keynote speech at the East German Economic Forum (OWF) in Bad Saarow, Brandenburg. Founded in 2006 by the Federal Government and the Federation of German Industries (BDI), the OWF claims to be the "most important platform for all topics related to Eastern Germany as a business location." According to its self-description, its goal is to network relevant stakeholders from business, politics, science, and society and to develop solutions for the region's specific "structural change and transformation processes."

It's well known that expectations for economic growth nationwide aren't rosy. And Mecklenburg-Western Pomerania's Prime Minister Manuela Schwesig (SPD) emphasized on Monday in Bad Saarow that the east still has particular "challenges" to overcome. She also pointed out on Deutschlandfunk radio that problems in eastern Germany arrive earlier. However, federal policymakers "always only react when western Germany is also affected." This is "a big mistake."

Schwesig said that citizens and businesses in eastern Germany urgently need lower energy costs. Her state, for example, already produces twice as much electricity from renewable energy sources as it needs. Now, "fair grid fees" are needed that "provide advantages to production regions instead of penalizing them for their investments." Reducing bureaucracy and encouraging investment are also important.

Brandenburg native Katherina Reiche had several announcements in store. The federal cabinet will launch a "first relief package for companies" by mid-July, she said in Bad Saarow. This will include a reduction in the electricity tax and initial labor market reforms. "Further measures will have to follow by the end of the year," Reiche said, without providing details.

"We will first adopt an investment booster, significantly improve depreciation options, and then move on to corporate tax reform."

Katherina Reiche, Federal Minister for Economic Affairs (CDU)

"We will first adopt a so-called investment booster, significantly improve depreciation options, and then move on to corporate tax reform in the second half of the legislative period," Reiche announced. She again insisted on expanding "secured capacity" – meaning power plants that reliably supply electricity even when the wind isn't blowing or the sun isn't shining. The government wants to build new gas-fired power plants.

According to Reiche, East Germany has caught up economically in recent years and is attractive to investors. Unemployment is lower than in Saarland or North Rhine-Westphalia, and wages have increased. This fills her with "pride and confidence."

On Sunday, Ulrike Malmendier, a member of the German Federal Government's Council of Economic Experts, called for more venture capital for eastern Germany, a stronger equity culture, and targeted immigration at the OWF. Her colleague on the Council of Economic Experts, Veronika Grimm, recently advocated for a further increase in the retirement age to 68.

Manuela Schwesig contradicted this. In eastern Germany, "97 percent of pensioners" have no other source of income than their statutory pension. Furthermore, many "in care, construction, and manufacturing" cannot even work until the current regular retirement age due to their hard work. Therefore, a further increase would mean a further pension cut for the vast majority in eastern Germany, said the Schwerin state premier.

Meanwhile, Left Party politicians Sören Pellmann and Ina Latendorf complained, with regard to the OWF, that the eastern part of the country received little attention in the coalition agreement between the CDU/CSU and the SPD. Regarding Federal Finance Minister Lars Klingbeil's (SPD) calls for spending cuts across all departments, Latendorf said: "Now the self-appointed Investment Minister Klingbeil is outing himself as the first austerity commissioner." His calls for austerity measures did not improve the outlook for eastern German companies. What was needed were "municipal debt relief and a massive expansion of regional economic and structural support."