Germany unveils 34-point economic and social reform package

The German government has unveiled a major package of economic and social reforms aimed at revitalizing the nation's sluggish economy and bolstering its competitiveness. Chancellor Friedrich Merz, alongside his coalition partners, presented the 34-point "Programme for Revival and Employment" on Thursday, July 2, 2026, following months of internal negotiations.

The centerpiece of the package is an income tax reform providing approximately 10 billion euros in annual relief targeted at low and middle-income earners, set to take effect from January 1, 2027. To fund this, the government plans to raise the top income tax rate from 45% to 47% for individuals earning more than 280,000 euros annually. Finance Minister Lars Klingbeil said this restructuring ensures the highest earners take on a larger share of the burden, calling the measure fair for the country's progress.

The reforms also include a significant overhaul of Germany's pension system. The coalition committed to implementing all recommendations from a government-appointed commission, including a plan to link the retirement age to life expectancy after 2031, which could see it rise beyond the current ceiling of 67....