The federal cabinet adopted today the 2015 Annual Economic Report: "Investing in Germany's and Europe's future". Investment and innovation provide a key to higher competitiveness, lasting prosperity, and a better quality of life for people in Germany and Europe. The Federal Government has therefore set itself the target of strengthening private-sector and public-sector investment in Germany and Europe.

Federal Minister for Economic Affairs and Energy Sigmar Gabriel said: "Despite the geopolitical turbulence, the German economy returned to growth last year. Stimulated primarily by a solid rise in consumer spending, German GDP is set to grow by 1.5% (price-adjusted) this year. The Federal Government expects that the minimum wage, and the increase in and broadening of pension payments, will boost consumer demand. By providing an additional stimulus for investment and a good climate for innovation and private-sector investment, we are ensuring that the upswing will continue and strengthen."

The increasing economic activity will boost corporate profits and permit a clear rise in wages. Disposable income of private households is increasing substantially. In view of the favourable economic environment and a clear fall in commodity prices, the households will substantially increase their spending on consumption and house-building.

In addition to a solid situation in the construction industry, corporate investment in equipment is likely to pick up during this year following a slackening in the second half of 2014. Furthermore, the German economy will be boosted by rising exports.

In 2014, despite the difficult environment, employment rose across almost the entire economy, with a total increase of 371,000 people, thus bolstering economic activity. At 42.7 million people in work, a new employment record was achieved for the eighth time in succession. This remarkably positive development is set to continue in 2015. The level of gainful activity is expected to rise by 170,000 people this year, to a annualised total of 42.8 million.

Overview : Selected key figures for macroeconomic trends in the Federal Republic of Germany [1]

2013 2014annual
projection
2015
Percentage change on preceding year
Gross domestic product (GDP), output approach
GDP (real)
Total employment
Unemployment rate in % (Federal Employment Agency definition) [2]

0.1

0.6

6.9

1.5

0.9

6.7

1.5

0.4

6.6

GDP by expenditure (real)
Private consumption expenditure
Machinery and Equipmen
Construction

0.8

-2.4

-0.1

1.1

3.7

3.4

1.6

1.9

2.2

Domestic demand0.71.21.6
Exports
Imports
External balance of goods and services (contribution to GDP growth) [3]

1.6

3.1

-0.5

3.7

3.3

0.4

3.6

4.1

0.1

Total gross wages and salaries per employee2.12.73.2


[1] Up to 2014 results of the Federal Statistical Office; National Accounts Status: 15. January 2015.
[2] In relation to the total labour force.
[3] Absolute change (stocks/external balance) in per cent of pre-year GDP (= contribution to change in GDP)

The Federal Government will continue to develop and adapt the tax laws, particularly with a view to arriving at an inheritance tax and a gift tax which meet the needs of small and medium-sized businesses and to modernising the land tax. Also, the Federal Government intends to put the fiscal and political conditions in place to reduce the impact of fiscal drag on taxpayers in this legislative term. Furthermore, the fight against the shifting of profits across borders by companies which operate internationally is of great significance; the German government is working together with its G20 partners on this.

Minister Gabriel said: "The German economy is facing the challenges of accelerated technological change and an ageing society. This means that innovation and investment in the future viability of commerce and society are of crucial significance for Germany and also for Europe. If we are to cope with these challenges and to be self-confident about the future, we need to open Germany up further and to reduce impediments: We need a more open society from the bottom to the top - in other words, we need greater upward mobility. We also need a better opening up of society for all lifestyles, and particularly the equality of women on the labour market and improved compatibility of work and family life. And we need to be even more open to the outside world, to be more international, and to have better integration of immigrants. A modern economic policy means not viewing economic growth and social and fair participation in this prosperity as opposites - and the same goes for efficiency and fairness.

The Federal Government is setting clear priorities in its economic policy: it is strengthening the public-sector spending on education, research, energy efficiency and infrastructure, and is improving the policy framework for private-sector investment. The Federal Government is giving backing to German commerce, and particularly to the industrial and small business sector, as it copes with the digital revolution. It is continuing the energy transition in a successful and cost-efficient manner, and is providing a clear policy environment on which investors can rely. Also, the Federal Government is investing more in education and is boosting labour-market integration. A sustainable fiscal policy and a balanced federal budget are providing the platform for this. The underlying concept for our economic policy is and remains the Social Market Economy. It is necessary to develop this further in a dialogue with all our citizens."

You can find the summary of the Annual Economic Report here (PDF: 70 KB).