UPDATE 1-Germany's Habeck lays out plan to boost economy, calls for investment fund

German Economy Minister Robert Habeck wants to remedy weak growth in Europe's largest economy with a debt-financed investment fund and change course on its budget policy, according to a 14-page position paper released on Wednesday. Creating a climate-neutral modern industrial future requires massive investment, both public and private, which is being held back by Germany's restrictive budgetary policy, said the paper.

German Economy Minister Robert Habeck wants to remedy weak growth in Europe's largest economy with a debt-financed investment fund and change course on its budget policy, according to a 14-page position paper released on Wednesday.

Creating a climate-neutral modern industrial future requires massive investment, both public and private, which is being held back by Germany's restrictive budgetary policy, said the paper. The International Monetary Fund (IMF) this week

significantly downgraded its forecasts for Germany. No other major industrialized country is currently weakening as much. "There is too little leeway in the budget to enable private and public investment on a significantly larger scale than today," said Habeck, placing blame on the country's constitutionally enshrined cap on spending.

To remedy this, Habeck wants to introduce a multibillion-euro "Germany Fund" to modernise infrastructure and provide an "unbureaucratic" investment premium of 10% for all companies. The proposed fund would focus in particular on small and medium-sized enterprises, large corporations and start-ups.

The investment premium would be offset against the company's tax liability. Unlike a simple improvement in writeoffs, companies that to do not make a profit at all, such as newly founded ones, would also receive the premium, wrote Habeck. In the paper, Habeck also advocates for reduced bureaucracy, simpler and faster government procedures and the necessity of subsidies for more climate protection.

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