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BERLIN (dpa-AFX) - A strong economic upturn in Germany is not in sight. Even the "economic wise men" expect only mini-growth this year. The economy is expected to pick up in 2025, but at a low level. In order to finance the modernization of the partly dilapidated transport infrastructure, the "economic experts" are in favour of a car toll.

"Economic experts" lower economic forecast

The German Council of Economic Experts, an advisory body to the German government, only expects gross domestic product to grow by 0.2 percent this year. Last fall, the "economic experts" had forecast growth of 0.7 percent.

"These are bad figures," said Council member Martin Werding in Berlin on Wednesday. He spoke of weak overall economic demand. Private households are currently still reluctant to consume, industry and the construction sector have only recorded a small number of new orders and the German export economy has cooled down considerably. However, the Council expects the German economy to gain some momentum over the course of 2024. Private consumption will probably begin to support the economy over the course of the year, as real incomes are likely to rise significantly. The German government is also only expecting a mini growth rate of 0.3% this year.

EU Commission more pessimistic

The EU Commission expects only minimal growth of 0.1 percent for the German economy this year. The reasons cited by the Brussels authority include weak foreign demand, sluggish private consumption and insufficient investment. Most recently, the Commission had predicted growth of 0.3 percent for Germany. Things are going better in other countries: the Commission expects growth of 1.0 percent across Europe.

Easing of inflation

According to the forecast by the German Council of Economic Experts, inflation in Germany will continue to slow down. The "wise men" expect an inflation rate of 2.4 percent this year and 2.1 percent in 2025. Last year, consumer prices rose by 5.9 percent.

According to the forecast, the German economy is likely to grow by 0.9% next year. World trade and global industrial production are likely to increase over the course of this year, benefiting German exports. However, geopolitical uncertainty is a significant risk, according to the report, with a view to the war in Ukraine and the conflict in the Middle East.

Lack of skilled workers as a brake on growth

According to the spring report, the German economy will fall short of its potential in terms of growth until the end of the decade. Above all, demographic change - i.e. the increasing ageing of society - and the resulting decline in the supply of labor will weigh on the growth outlook in the medium term.

Looking ahead to budget negotiations

The federal government is currently engaged in difficult negotiations on the 2025 federal budget in view of the billions of euros in shortfalls. The "economic experts" see this as a risk. It is uncertain in which areas consolidation will take place. Uncertainty is affecting the investment climate - in other words, companies are waiting to see what happens.

"Wise economists" want a car toll

The transport infrastructure needs to be modernized and expanded, according to the spring report. "This requires higher infrastructure spending, for which greater user financing, for example a mileage-based car toll, should be used." As heavy vehicles wear out the infrastructure more than light vehicles, it would make sense to differentiate according to weight.

The poor condition of the transport infrastructure is increasingly leading to traffic jams on freeways and poor reliability in rail transport, thus impairing freight transport and economic activity. The foreseeable growth in transport volumes will further increase the strain on the infrastructure. According to the report, the existing truck toll contributes significantly to covering the federal government's transport expenditure. In addition to HGVs, cars should also be used to finance the infrastructure.

Start-up for car toll failed

In 2019, the planned car toll in Germany - a prestige project of the CSU in the then federal government - was stopped by the European Court of Justice as unlawful. The main sticking point was that only drivers from within Germany were to be fully exempt from vehicle tax for the toll. The Minister of Transport at the time was CSU politician Andreas Scheuer. Shortly after the ruling, he terminated the contracts with the intended operators, who then demanded compensation. An agreement reached after arbitration proceedings resulted in the federal government having to pay them 243 million euros.

Internal dispute in the committee

The push for a car toll appears in a separate chapter of the report on the climate-neutral transformation of freight transport. In it, the council majority advocates focusing on electric trucks. To this end, the development of a charging infrastructure should be the focus of government action. Other low-emission drive systems do not have the same market maturity, said Council Chairwoman Monika Schnitzer.

Council member Veronika Grimm, on the other hand, held a different opinion - the differences in content were aired on the open stage on Wednesday. Grimm believes that a one-sided focus on the electrification of heavy goods vehicles is wrong. The filling station infrastructure for hydrogen in heavy goods transport must also be expanded, as stipulated by the EU. Grimm once again rejected possible conflicts of interest because she had taken up a position on the supervisory board of the energy company Siemens Energy. Schnitzer announced a code of conduct for future work in the Council - but left open the date by which this is to come./hoe/DP/men