Germany's Merz promises rapid progress in reforms to kickstart growth

German Chancellor Friedrich Merz has promised to keep up the pace of planned economic reforms after meeting leading national business associations.

Speaking in the southern city of Munich, the conservative leader said he shared the fear that jobs were being lost. "That is why labour costs must be reduced," he said.

The contribution that the federal government can make is to reform the social security system in order to get the high labour costs under control and, if possible, to reduce them.

"I share the view that we do not have much time left to do this. We must ensure that we get these reforms off the ground this year," he said after the meeting, which took place on the sidelines of the International Craftsmanship Fair.

Merz is under pressure to kickstart growth in Germany. He was warned by the associations before the meeting that the economy was under a level of pressure "hardly seen in the post-war period."

So far, the economy is slowly gaining momentum, but a noticeable upswing is not in sight. The government expects only modest economic growth of 1% this year.

This growth is likely to come mainly from massive debt-financed investments in national infrastructure projects.

Additionally, new uncertainties have arisen due to the war in the Middle East. According to economic researchers, a further rise in oil prices would have a significant impact on the German economy.

The annual meeting between the German chancellor and business associations in Munich has a long-standing tradition, but for Merz, it is his first such appointment.

The participants include the Confederation of German Employers' Associations, the Federation of German Industries, the Association of German Chambers of Industry and Commerce and the German Confederation of Skilled Crafts.