Latest news with #KatherinaReiche
CNBC
3 days ago
- Business
- CNBC
Could German infrastructure be the next hot investment?
Germany's newly minted government is looking to the private sector to help save the country's ailing infrastructure. Economy minister Katherina Reiche called for a cash injection earlier this month: "We need speed and investments, and we need private capital," she told CNBC. "Of all the investments we will do, 10% of them could be done with public money, we need 90% of private sector investments." Germany has become riddled with infrastructure issues after a long period of underinvestment and restraints that have been linked to the country's fiscal rules, leading to crumbling bridges, broken train tracks and limited digitalization. These issues are a top priority for the new government, according to its coalition agreement. Germany earlier this year also enshrined a 500 billion euro ($564 billion) infrastructure and climate special investment fund in its constitution, alongside an amendment to its fiscal rules that is set to increase defense spending — both of which are widely seen as potential boosts for the country's struggling economy. "Overall, there are certainly large opportunities coming in defence and infrastructure," Greg Fuzesi, euro area economist at J.P. Morgan, told CNBC. And enthusiasm for Germany's investment opportunities seems to have gone global, according to Stefan Wintels, CEO of German investment and development bank KfW. "There is a lot of interest ... This year I was on the road in New York, London and Zurich. I observe and feel a lot of belonging to Germany. People want to invest in Germany," he told CNBC on the sidelines of the Tegernsee summit earlier this month. Robin Winkler, chief German economist at Deutsche Bank, echoed the sentiment, telling CNBC that the recent political moves could trigger a wave of private sector investment. "There has been a notable pick-up in investor interest in German infrastructure," he said, noting that the mobilization of private capital would be crucial for the government "to get a bigger bang for its buck out of the new special fund." On top of Berlin's plans to spend big on infrastructure, its commitment to cut red tape would also likely be attractive for investors, Winkler explained. "In recent years, infrastructure projects in Germany have been hamstrung by excessive bureaucratic and regulatory hurdles. There is now an ambitious plan to reduce these hurdles... We expect these reforms to incentivize private infrastructure investment, too," Winkler said. Berlin has also suggested it could take further measures to incentivize private investment, with economy minister Reiche telling CNBC that the government needed "to shape programs and make offers for the private sector to invest in our infrastructure." Dresden's Carola Bridge has become emblematic of the state of German infrastructure. It partially collapsed in September of 2024, just minutes after the last overground train of the night had crossed it. According to the organization Transport & Environment, thousands of bridges across Germany are in need of work and require require investments totalling around 100 billion euros. Elsewhere, Germany's train company, Deutsche Bahn, reportedly said it will need around 150 billion euros by 2034 to modernize, maintain and expand its existing network and boost digitalisation. More broadly, a report from the Cologne Institute for Economic Research from May 2024 suggests 600 billion would be needed over 10 years to move the country forward on infrastructure. Questions about infrastructure investment remain despite the political momentum, including concerns about time pressure and capacity, Jens Thiele, head of project finance and corporates at Hamburg Commercial Bank, told CNBC. "It will be interesting to see how long approval processes will take to get projects to RTB (ready to business) stage and whether there's enough capacity to develop all these projects within such a compressed timeframe," he said in written comments. J.P. Morgan's Fuzesi also noted timing is a key concern. "Investors have asked questions about the speed of delivery," he said. "In my view, "infrastructure" is very broadly defined and therefore constraints in one area can be overcome by doing more in another area. Ultimately, this will come down to political will," Fuzesi explained. He added that it was also unclear when — and how successfully — the government's goals to simplify planning processes would become a reality. For the German government, pressure is on to soon implement its investor-enticing promises and its investment targets.
Zawya
7 days ago
- Business
- Zawya
EU sees 'new impetus' in trade talks from weekend call with Trump
A weekend telephone call between U.S. President Donald Trump and EU chief Ursula von der Leyen gave 'new impetus' to trade talks, the EU said on Monday, after Trump dropped his threat to impose 50% tariffs on imports from the European Union next month. Trump restored a July 9 deadline to allow for talks between Washington and the 27-nation bloc to produce a deal after what he said was "a very nice call" with von der Leyen on Sunday which an EU spokesperson said had been initiated by her. The euro hit a one-month high against the dollar on Monday, while European shares surged and were poised to recoup the previous session's losses. Gold prices fell as Trump's latest move reduced demand for the safe-haven asset. The US and EU trade representatives were due to hold talks on Monday afternoon, European time, the European Commission spokesperson said, declining to give any information about the content of the call between Trump and von der Leyen. "There's now also a new impetus for the negotiations, and we will take it from there," the spokesperson said. "They agreed both to fast track the trade negotiations and to stay in close contact." German Economy Minister Katherina Reiche called for tariff negotiations to proceed calmly. "We have to find a common path," she said. Trump had said on Friday that he was recommending a 50% tariff effective from June 1, expressing frustration that trade negotiations with the EU were not moving quickly enough. The threat roiled global financial markets and intensified a trade war that has been punctuated by frequent changes in tariff policies toward U.S. trading partners and allies. The U.S. president's softened stance two days later marked another temporary reprieve in his erratic trade policy, even if the latest whipsawing in decision making reminded policymakers and investors how quickly circumstances could change. "It is possible that a deal with the European Union will be reached by 9 July," Commerzbank currency strategist Michael Pfister said. "However, it is questionable what has changed in terms of the fundamental problems following a phone call. One thing should be clear after Friday's announcement: the brief respite from tariffs that we enjoyed was only temporary." EU COMPANIES ON EDGE EU trade chief Maros Sefcovic was scheduled to have a video conference on Monday with the CEOs of Mercedes-Benz, Volkswagen, BMW and Stellantis, as businesses wondered what plans, if any, they should make. Despite the relief, Germany's family-owned LAPP Group, which makes everything from cables and wires to robotics for factories, warned that some of its specialised products would still be affected by the planned tariffs, and the volatile business environment. "Unfortunately, current U.S. politics is characterised by unpredictability, individual interests and populism," CEO Matthias Lapp told Reuters. "Germany's good transatlantic relations have been built up over decades of diplomatic work and mutual understanding. However, confidence in their stability is currently suffering massive damage." Trump, who has repeatedly expressed disdain for the EU and its treatment of the United States on trade, relented after European Commission President von der Leyen told him on Sunday that the EU needed more time to come to an agreement. She asked him during a call to delay the tariffs until July, the deadline he had originally set when he announced new tariffs in April. Trump told reporters he had granted the request. "I agreed to move it," Trump said before returning to Washington after a weekend in New Jersey. "She said we will rapidly get together and see if we can work something out." Von der Leyen said in a post on X that she had a "good call" with Trump and that the EU was ready to move quickly. "Europe is ready to advance talks swiftly and decisively," she said. "To reach a good deal, we would need the time until July 9." UNCERTAIN IMPACT The negotiations had been stuck, with Washington demanding unilateral concessions from Brussels to open up to U.S. business while the EU seeks an agreement in which both sides could gain, according to people familiar with the talks. The EU already faces 25% U.S. import tariffs on its steel, aluminium and cars and so-called "reciprocal" tariffs of 10% for almost all other goods, a levy that had been due to rise to 20% after Trump's 90-day pause expires in July. The levy could increase to 50% in a no-deal scenario, which could raise consumer prices on everything from German BMWs and Porsches to Italian olive oil and hurt demand for French luxury handbags . It was not clear, however, whether the 50% tariff threat would apply to all EU imports or just those subject to the U.S. 'reciprocal' tariff, which does not apply to steel and cars and other products subject to investigations, such as semiconductors, pharmaceutical products and lumber. (Additional reporting by Jan Strupczewski, Amanda Cooper, Charlotte Van Campenhout, Nikhil Sharma, Christop Steitz, Ludwig Burger, Richard Lough, Christian Kraemer; Writing by Ingrid Melander; Editing by Philippa Fletcher)
Reuters
7 days ago
- Business
- Reuters
EU sees 'new impetus' in trade talks from weekend call with Trump
BRUSSELS, May 26 (Reuters) - A weekend telephone call between U.S. President Donald Trump and EU chief Ursula von der Leyen gave 'new impetus' to trade talks, the EU said on Monday, after Trump dropped his threat to impose 50% tariffs on imports from the European Union next month. Trump restored a July 9 deadline to allow for talks between Washington and the 27-nation bloc to produce a deal after what he said was "a very nice call" with von der Leyen on Sunday which an EU spokesperson said had been initiated by her. The euro hit a one-month high against the dollar on Monday, while European shares surged and were poised to recoup the previous session's losses. Gold prices fell as Trump's latest move reduced demand for the safe-haven asset. The US and EU trade representatives were due to hold talks on Monday afternoon, European time, the European Commission spokesperson said, declining to give any information about the content of the call between Trump and von der Leyen. "There's now also a new impetus for the negotiations, and we will take it from there," the spokesperson said. "They agreed both to fast track the trade negotiations and to stay in close contact." German Economy Minister Katherina Reiche called for tariff negotiations to proceed calmly. "We have to find a common path," she said. Trump had said on Friday that he was recommending a 50% tariff effective from June 1, expressing frustration that trade negotiations with the EU were not moving quickly enough. The threat roiled global financial markets and intensified a trade war that has been punctuated by frequent changes in tariff policies toward U.S. trading partners and allies. The U.S. president's softened stance two days later marked another temporary reprieve in his erratic trade policy, even if the latest whipsawing in decision making reminded policymakers and investors how quickly circumstances could change. "It is possible that a deal with the European Union will be reached by 9 July," Commerzbank currency strategist Michael Pfister said. "However, it is questionable what has changed in terms of the fundamental problems following a phone call. One thing should be clear after Friday's announcement: the brief respite from tariffs that we enjoyed was only temporary." EU trade chief Maros Sefcovic was scheduled to have a video conference on Monday with the CEOs of Mercedes-Benz ( opens new tab, Volkswagen , BMW ( opens new tab and Stellantis ( opens new tab, as businesses wondered what plans, if any, they should make. Despite the relief, Germany's family-owned LAPP Group, which makes everything from cables and wires to robotics for factories, warned that some of its specialised products would still be affected by the planned tariffs, and the volatile business environment. "Unfortunately, current U.S. politics is characterised by unpredictability, individual interests and populism," CEO Matthias Lapp told Reuters. "Germany's good transatlantic relations have been built up over decades of diplomatic work and mutual understanding. However, confidence in their stability is currently suffering massive damage." Trump, who has repeatedly expressed disdain for the EU and its treatment of the United States on trade, relented after European Commission President von der Leyen told him on Sunday that the EU needed more time to come to an agreement. She asked him during a call to delay the tariffs until July, the deadline he had originally set when he announced new tariffs in April. Trump told reporters he had granted the request. "I agreed to move it," Trump said before returning to Washington after a weekend in New Jersey. "She said we will rapidly get together and see if we can work something out." Von der Leyen said in a post on X that she had a "good call" with Trump and that the EU was ready to move quickly. "Europe is ready to advance talks swiftly and decisively," she said. "To reach a good deal, we would need the time until July 9." The negotiations had been stuck, with Washington demanding unilateral concessions from Brussels to open up to U.S. business while the EU seeks an agreement in which both sides could gain, according to people familiar with the talks. The EU already faces 25% U.S. import tariffs on its steel, aluminium and cars and so-called "reciprocal" tariffs of 10% for almost all other goods, a levy that had been due to rise to 20% after Trump's 90-day pause expires in July. The levy could increase to 50% in a no-deal scenario, which could raise consumer prices on everything from German BMWs ( opens new tab and Porsches (PSHG_p.DE), opens new tab to Italian olive oil and hurt demand for French luxury handbags ( opens new tab, ( opens new tab. It was not clear, however, whether the 50% tariff threat would apply to all EU imports or just those subject to the U.S. 'reciprocal' tariff, which does not apply to steel and cars and other products subject to investigations, such as semiconductors, pharmaceutical products and lumber.
Al Jazeera
24-05-2025
- Business
- Al Jazeera
EU vows to defend interests after Trump threatens 50 percent tariffs
The European Union has said it will defend its interests after United States President Donald Trump threatened to impose a 50-percent tariff on all goods from the 27-member bloc. The EU's top trade official, Maros Sefcovic, said in a post on X that he spoke on Friday with US Trade Representative Jamieson Greer and Commerce Secretary Howard Lutnick on the issue. 'The EU is fully engaged, committed to securing a deal that works for both,' he said, adding that the EU Commission remains ready to work in good faith towards an agreement. 'EU-US trade is unmatched and must be guided by mutual respect, not threats. We stand ready to defend our interests.' Trump posted on his Truth Social platform that he is 'recommending' a huge 50 percent duty on the EU starting on June 1 since talks with them 'are going nowhere'. Speaking later in the Oval Office, the Republican president emphasised that he was not seeking a deal with the EU but might delay the tariffs if more European companies made major investments in the US. 'I'm not looking for a deal,' Trump told the reporters. 'We've set the deal. It's at 50 percent.' European leaders warned the tariffs will hurt both sides. German economy minister Katherina Reiche said everything must be done 'to ensure that the European Commission reaches a negotiated solution with the United States' while French foreign minister Laurent Saint-Martin said the bloc prefers de-escalation but is 'ready to respond'. If implemented, the tariffs would mean that the EU will have higher import taxes on its hundreds of billions worth of exported goods compared with China, which had its tariffs cut earlier this month to allow more negotiations between Washington, DC, and Beijing. In early April, Trump announced a 20 percent tariff on most EU goods but brought it down to 10 percent until July 8 to allow time for more negotiations. Trump has complained that existing frameworks are 'unfair' to US companies as the European bloc sells more goods to its ally than it buys from it. Trump on Friday also warned that the US tech giant Apple could also be hit with a 25 percent import tax on all iPhones not manufactured but sold in the US. His announcements online dealt another blow to stock markets both in the US and in the EU, with the S&P 500 down about 0.8 percent and the pan-European STOXX 600 index falling about 1.2 percent.
Time of India
23-05-2025
- Business
- Time of India
German economy in crisis: When will it bounce back?
German economy in crisis: When will it bounce back? (AP) T he term recession refers to an economy that is shrinking. This has been happening in Germany for two years now, the only country in the European Union experiencing such a decline. In 2024, more companies closed than in the previous major financial and economic crisis in 2011. High electricity prices have meant that energy-intensive industries have been hit especially hard. In addition, companies are having to close due to a shortage of workers and specialists as society is ageing. Germany's burgeoning bureaucracy is another major factor hampering business. The new government has set out to improve the situation quickly and sustainably. But this will not come about overnight. This is the finding of the Federal Government's economic advisory body. In its spring report, the German Council of Economic Experts spoke of a "period of considerable sluggishness" and practically ruled out a rapid recovery. No longer internationally competitive For 2025, the five economics professors project stagnation, meaning zero growth. In 2026, they see the economy possibly recovering somewhat with one percent growth. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Cinnamon: The Greatest Enemy of Blood Sugar Magazine Glyco Learn More Undo However, the experts are far from certain that Germany will be able to get back on track for economic success in the medium and long term. The German economy has become less and less competitive. A decisive factor was Russia's invasion of Ukraine in 2022 and the halt to Russian gas supplies. The successful German business model of using cheap energy and high engineering skills to manufacture products that are in demand worldwide has been history ever since. Donald Trump puts the brakes on German exports On top of this, there are also domestic problems. "Bureaucratic regulations and lengthy approval procedures are slowing down macroeconomic growth," states the report by the economic experts. US President Donald Trump is also having a negative impact. His tariffs are jeopardizing economic growth worldwide, but have particularly negative consequences for the export-oriented German economy. In order to ease the burden on companies, Federal Economics Minister Katherina Reiche wants to introduce a number of initial measures by mid-July. The electricity tax is to be reduced, and the labor market will be reformed, Reiche said at an economic forum last week. Growth is the order of the day, she said, and the government will provide the stimulus, also by lowering corporate taxes. New business models are needed The panel of economic experts is calling on the federal government to take a realistic view of the future. No attempts should be made to save jobs that are not viable in the long term, they wrote in their report. "An economic policy that aims to stop structural change through subsidies cannot be successful in the long term," said Monika Schnitzer, Chairwoman of the German Council of Economic Experts. Instead, the transition to new business models and professions should be promoted in a targeted manner. The multi-billion-euro financial package launched by the governing center-right Christian Democratic Union (CDU)/Christian Social Union (CSU) and the center-left Social Democratic Party (SPD) is a source of hope. Some €500 billion ($567) are to be invested in the ailing infrastructure over the next twelve years. Money sparks greed "If used correctly, the funds can make Germany fit for the future, with considerable positive growth effects," said economist Achim Truger. However, he added, only if the money is actually spent on investments. The economists suspect that the ruling parties may use extra funds to finance their election promises, such as an increase in pensions for housewives, agricultural diesel subsidies, and a reduction in the restaurant tax. The economists warn that the €500 billion package must not be misappropriated. Because this much money cannot be spent quickly, the experts do not expect a positive effect until 2026 at the earliest. As the €500 billion fund and the massive increase in defense spending are based on fresh loans, Germany will no longer be able to meet the EU debt targets. This is something the experts have also warned against. Only if Germany manages to modernize itself structurally, the experts say, would such expenditures be justifiable. Many Germans are working part-time Chancellor Friedrich Merz has repeatedly said that people in Germany need to work more. "We cannot maintain prosperity with a four-day week and a work-life balance," he recently told the CDU Economic Council. He called for more flexible working hours and incentives for people to continue working voluntarily beyond retirement age. Economics professor Veronika Grimm said it is right that incentives are needed to increase participation in the labor market. She sees great potential in increasing the participation of women, mainly by improving childcare. But how can this be done if there are too few teachers? Grimm suggests that a shrinking workforce will force an increase in productivity of those who remain. This, she says, is possible through digitalization and a reduction in bureaucracy. How to reduce bureaucracy Despite numerous political initiatives, the burden of bureaucratic costs on companies has not yet decreased noticeably. The experts suggest speeding up application and approval procedures, reducing disclosure obligations that companies have towards the state, digitizing public administration, and setting up a standardized nationwide e-government portal. New regulations should be effective and user-friendly. Otherwise, this would only lead to more inefficient bureaucracy. "Between hope and trepidation" is how the Council of Experts described their outlook. And in their press release, the German Chamber of Industry and Commerce wrote: "Time is pressing, companies are ready. Now the politicians have to deliver."
