German chancellor pledges to hold onto AAA rating amid fiscal warnings

Germany's chancellor pledged on Wednesday to preserve the country's status as the only advanced economy still holding a AAA credit rating, vowing to safeguard solid public finances in the face of fiscal warnings through savings and reforms.

"Germany is the only country among the G7 that still has a triple-A rating. I want that to remain the case," Friedrich Merz said after receiving the annual report of the German Council of Economic Experts. He added that he is in full agreement with his Cabinet colleagues that everything must be done to keep the rating.

The G7 is the group of seven major advanced economies: the United States, United Kingdom, France, Germany, Italy, Canada, and Japan.

Merz welcomed the council's upward revision of the growth outlook to 1.3%. The economy is slowly improving again, Merz noted, and the advisers raised their expectations to roughly that level.

"Given the many crises in Germany, it was not necessarily to be expected that we would manage to pull this off," he said. The upturn is set to continue into next year, providing encouraging signals for businesses and private households throughout Germany.

On the report's focus on fiscal policy, Merz said the government shared the call for solid budget policy and stable public finances. The government is following a corresponding course while facing a series of challenges that must also be financed, he added.

The conservative leader said the government will continue cuts in subsidies and financial aids, as well as savings on personnel. "That also includes the structural reforms in the social security systems," he stressed. "We particularly want to switch pension insurance to a new concept. We also want to reach a decision on this within the Cabinet this year."

Merz described competitiveness and growth as priorities of his government, citing the special fund for infrastructure and climate neutrality, higher spending on the German armed forces, and infrastructure modernization. He said the more optimistic forecast by the German Council of Economic Experts strengthens the government on this path.