06-03-2025
German banks warn Berlin that red tape could dampen spending plans' oomph
FRANKFURT, March 6 (Reuters) - Germany's banks on Thursday warned Berlin that giant spending plans for infrastructure and defence need to be accompanied by overhauls to cut red tape to get their maximum punch.
This week, the parties hoping to form Germany's next government agreed to create a 500-billion-euro infrastructure fund and overhaul borrowing rules, a tectonic spending shift that fuelled hopes of reviving Europe's largest economy.
The optimism has sent German bank shares soaring.
But top German bankers are concerned that the measures could lose their oomph and prove short-lived if the government doesn't also tackle bureaucracy.
"These measures are only justifiable if they are accompanied by far-reaching structural reforms. Otherwise it will remain an expensive flash in the pan," said Heiner Herkenhoff, the head of the Association of German Banks, said in a statement to Reuters.
Christian Ricken, the CEO of the German property lender Aareal, said the spending plans could improve financial conditions for property developers to build apartments to confront the nation's housing shortage.
"But we also need simplifications in terms of regulations and laws so that we can build sensibly again," he said.
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