Chancellor Olaf Scholz sees upcoming green tech investments in Germany helping revive growth in Europe’s largest economy.
Spending on renewable energy sources, hydrogen production as well as related networks will “have an impact on the entire economy,” Scholz said Sunday in an interview with public broadcaster ZDF.
“We’ve moved at an incredible speed and have amended a range of legislation so that finally sufficient construction for our needs has gotten off the ground,” he said.
Germany’s economy stagnated during the second quarter following a winter recession, weighed down by high energy costs, a lack of skilled labor and rising interests rates in the euro-zone. Industrial output, a leading indicator for any recovery, continued to slide in June, led by cars and construction.
Read more: German Industrial Woes Endure as Output Drops to 6-Month Low
The struggles have triggered calls for the government to extend a cap on power and gas prices for companies and households. While Germany works through its immediate hurdles, the government is plowing multi-billion euro subsidies into attracting chipmakers.
This month, Taiwan Semiconductor Manufacturing Co. agreed to build a €10 billion ($11 billion) plant in eastern Germany in partnership with Infineon Technologies, NXP Semiconductors and Robert Bosch.
The commitment is another coup for Scholz, whose party has been overtaken in the polls by Germany’s far-right AfD, after the government agreed to €10 billion in aid for a new Intel Corp. plant in Magdeburg. For TSMC, the three-party ruling coalition will provide as much as €5 billion in subsidies, Bloomberg has reported.
“These companies aren’t investing due to the subsidies,” Scholz said. “They picked Germany as an economic location.”
Scholz’s coalition, with his left-of-center SPD, the Greens and liberal FDP, is currently some way from gaining a majority in the polls. In a survey run by ZDF, only 21% of respondents said they believed Scholz could push through his agenda.
--With assistance from Kamil Kowalcze.