Germany unveils 34‑point reform package to boost economy and jobs

Germany's governing coalition announced a comprehensive reform programme comprising 34 measures aimed at revitalising the economy, safeguarding employment and easing the tax burden on households. Prime Minister Friedrich Merz said the plan will modernise the state and better prepare it for future challenges.

From 1 January 2027, the tax reform will raise the basic personal exemption, increase child allowances and adjust income‑tax brackets, targeting a yearly tax reduction of about €100 billion and potentially adding up to €600 of disposable income for an average family. Labour market changes include extending the maximum duration of fixed‑term contracts from 24 to 48 months, with the possibility of up to six renewals, and enhancing tax incentives for Sunday and public‑holiday work.

The package also proposes remedial education and vocational training for young people who have not completed schooling, and a reduction of administrative burdens by eliminating unnecessary reporting requirements and simplifying personal‑tax filing procedures. Merz promised that citizens will notice tangible improvements in daily life.