Structural weaknesses in the economy need to be addressed

It is crucial that Germany embarks on a period of economic growth, the country’s Finance Minister Jörg Kukies told CNBC on Thursday, adding that structural weaknesses must be addressed.

“We just received a downward revision of the growth forecasts for the IMF again,” Kukies told CNBC’s Karen Tso and Steve Sedgwick at the World Economic Forum in Davos.

“It is absolutely necessary to address the structural weaknesses of our economy,” he added. “It’s really important that we get on a path of economic growth.”

Kukies also addressed the debate on Germany’s so-called debt brakea fiscal rule enshrined in the German constitution. The debt brake limits the amount of debt the government can take on and dictates that the size of the federal government’s structural budget deficit must not exceed 0.35% of the country’s annual gross domestic product.

The Finance Minister said some “specific reforms” to the rule were necessary “because we have a lot of need to spend on infrastructure for railways, roads, bridges, education, 5G, 6G infrastructure and so on.”

“But the vast majority of investment (…) in our country has to come from the private sector,” he added.

Kukies became Germany’s finance minister in November, replacing Christian Lindner, who was fired by Chancellor Olaf Scholz after months of wrangling and clashes over the economy and budget.

Lindner’s dismissal effectively ended the former German ruling coalition, which consisted of Scholz’s Social Democratic Party, Lindner’s Free Democratic Party, and the Green Party. This, in turn, caused Germany’s national elections to be brought forward to February 23.

“The election has to do with the economy,” Kukies added.

This is breaking news and will be updated shortly.