Germany’s coalition government has approved a 25 billion-euro growth and investment package for this year.
Details were worked out during a two-day strategy meeting at a castle near Berlin.
Chancellor Angela Merkel and other top politicians are hoping that the measures will boost consumer confidence and create new jobs.
But to pay for it, the government will have to borrow more and spend the money from an increase in value-added tax due next year.
Merkel said: “With these measures, we are remaining faithful to our coalition agreement, that’s to say supporting a programme of investment, overhaul, and reform. We’re doing things that will work quickly.”
Six billion euros will go into scientific research and 4.3 billion to infrastructure projects.
One billion will help Germany’s hard-pressed building sector, encouraging households to repair and renovate their homes and 460 million will go into more support for young families.
The growth and investment package comes hard on the heels of a batch of better-than-forecast economic data and sentiment surveys.
The latest – from the ZEW institute – shows that when over 300 analysts and institutional investors were questioned in January their economic expectations were at a two-year-high.
But the policy makers meeting did not address the problem of Germany’s high unemployment.
Economists have criticised Merkel’s government for so far not coming up with comprehensive proposals for reforming the market and tackling the array of labour laws that some blame for the country’s recent lacklustre job creation.