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Chancellor, thank you very much for joining us. I'm going to ask you about the things that you would expect me to ask about European security and some of the announcements around Tariff's But I wanted to start by making an observation about the last few weeks in Washington that we have watched this whirlwind of the new administration and the impact it's had, not just in the world, but in Washington and Elon Musk's Department of Government Efficiency DOGE
has turned the federal government upside down in the time it takes to read Marrio Druggies report on European Competitiveness, let alone start to implement it. So I just wondered, when you look at the state of the European economy and you look at the pace of change now in Washington, does Europe need a DOGE of its own.
No, we need a lot of changes when everyone needs them. So we have to work against red tape, against bureaucracy, all this, and there is a strong willingness to succeed with attempts about working against planning restrictions that make it too difficult to invest, and things like that, and it was my initiative, together with the French President, to ask the Commission to make proposals about a better European Union and to get written of red tape and bureaucracy, and
they do so. I'm really confident that we will do our task and hopefully sensible things.
But lots of sensible things have been said for years, and most of the things that were in the Mario Dragon Report have been said many times before. But the pace of change is so slow. And meanwhile, you have an economy that has been has not grown in the time that you've been Chancellor, while the US economy has grown seven percent. So don't you sometimes think that a kind of radical throwing up of things, a radical change, might be needed rather than same old statements.
As you know, I'm a progressive, I'm a social democrat, so I'm in favor of change. But all the time, the question is what sort of change it is about. And yes, it is necessary that we work hard to make it easy to invest in Europe and to get rid of some of the regulations that are hindering investments to be done very fast. But on the other side, I think we have good chances for Europe to grow
and we have the best in Germany. Yes, it is true that we faced a really heavy storm after the Russian aggression against Ukraine and all the consequences has had for the energy supply to Germany, for prices and many other things.
But we are now behind all the biggest difficulties.
Inflation is down again and this will also help investments, especially when it comes to housing. So I'm quite confident that with some extra activities we will have a chance to speed up growth. One of the proposs I make will be very similar to things you are used to in the United States. So it is about the text credit which you get for investments in Germany easily to be handled and something that will boost investment.
But if you're a German voter, how can you expect change to come out of this election? If you think of the possible range of outcomes, when you look at the scale of the problems and the stagnation in Europe, do you understand the people who think we need radical change and we're not going to get it from any coalition that comes out of this election.
I think there will be a good chance for better growth when you vote for a social democratic party in Germany. So this is I propose others will do a different one, but there is.
Always hasn't been any since you became chancellor.
We had a crisis, there is a war.
I was not the one that started the aggression against Ukraine at Putin, and we worked against him and his aggression. We supported Ukraine, we increased our spending for defense, and we organized our economy in a way that it was able to live with all these radical changes that.
Came to us. So now we are at a good starting point.
Coming back to the Union, I'd say the biggest thing we have to achieve is to develop the Capital Markets Union, which has to come from a question of finance ministers to a question of leaders because it is obvious also when you look at the Dragon report, that this is the main question for better growth in Europe, and so we have to do it and not to speak just about it and.
Will there be meaningful progress on that in the next few months.
I've spoken to many and also that this is a leadership question, and this means that many have to.
Be ready to accept that not all these small.
Advantages of the one country and the other one country could continue. It is better to have a capital market in Europe that is ready to find the growth of companies from the equity market. And that's what we are having to do. And that's the big difference between the United States and Europe. Though we have even more money for investment in Europe.
Donald Trump does seem to be President Trump seems to be in a hurry to put tariffs on European cars. Should the European Union might happen as soon as April. Should the European Union be cutting their tariffs in advance of that? To avoid that?
First, I have to admit that I'm in favor of free trade. I think this is a big advantage we have in the world, and that many of the wealth and the growth we have in the world is because of free trade. So it must be fair free trade. Trade, yes, but free trade is better than tariffs and protectionism.
I don't think that this.
Will work when it comes to the European Union. I think everyone knows that we are a big economic area with a lot of strength, where policy about tariffs is something that is our common policy. So we are strong enough to react to everything that is harming European economy. But we should and we should react always, but in a way that is always offering the chance for an agreement because it's better for all parties involved, especially on the both sides of the Atlantic.
But it is the Opini Union considering cutting tariffs before any announcement on cars.
We invite the United States to discuss with the responsible authorities about what we can do for a better progress that serves all of us.
There is a willingness, and.
So I'm sure it's better if we agree to something that helps all of us. And it is good to know that Europe is strong enough to act and to react.
You talk about it being a common project, but Donald Trump has made clear that he wants to do reciprocal tariffs. He doesn't want a wto approach where all the rules are on the same countries, And even with the European Union, he might want to have a different tariff regime for France and Italy and Germany. What would you do? Then?
The European Union is a unified economy and has there's nothing to stop the US doing that, but it has common tariffs and we act together and we will stick together, which I think is also important. And so I'm quite confident that a good solution is feasible and everyone should work or make it happen.
You spoke this morning very clearly about what you need to do to increase defense spending above two percent of GDP and suspending the debt break just for that additional defense spending, but for many countries it will want to also have joint debt issuance for Europe as a whole to be able to invest enough in defense. Would you consider that given everything that's happened in the last few.
Weeks, I think there are three things we can do in this very moment. The first is that we agree in Germany that supporting Ukraine is something of an extra effort, so we should have extra room for maneuver also financing this support to Ukraine, which when it comes to the figures, Germany is doing the most. We are the biggest support of Ukraine in Europe, the second biggest in the world,
and this has to continue. We cannot pay for it with cuttings in pension schemes or in the health sector, or in cuttings in the investment into streets and railways and so on. So I think it's clear that we have to do this. And the second is that we have to agree how we will continue with the spending of more than two percent of our GDP for defense, which we achieved because of an extra fund which I
managed to get through the parliament. But for the future we need a new decision about this and this is for continuing with this two percent plus already thirty billion a year. So also this will not work with tax increases or cuttings and spending in the different areas of
the German budget. When it comes to do more, which will be obviously necessary when we look at what NATO is discussing, then it especially means that we do something for this activities which gives us in Germany the opportunity to spend even more.
And this has also to do with.
The reform of the debt regulation in Germany. When it comes to Europe, I think we should help every country if it spends more than two percent, to be not hindered by the European regulation on treating.
Changing the stability.
We have to change these agreements so that this is feasible for a country to do.
But for many countries, I mean, for Germany has very low debt relative to other countries.
As we might say that we are going down to sixty percent.
Other countries will find it very difficult to keep issuing more and more debt because, as you pointed out, they're over one hundred percent, maybe over one hundred and forty percent of GDP. You don't think this is a time for joint debt issuance. All of the things that have happened.
It's a very difficult question to go into it.
And I was the.
Designer of the Recovery Fund, which we had after the Corona crisis, or during the Corona crisis to go through this very difficult times, and the idea was that we have something which is giving direct support to countries and other aspects, which is just another way of taking money from the market. So my view is that the first thing to do is now to give room for acting to the different member states, and.
It sounds like that could be a model for expanding defense spending in the future for Europe. I think this is the Recovery Fund.
No, no, no, this is not the model.
I was really precise this morning saying that what I propose is to give the countries the room for extra spending.
In this debates about Ukraine, I they we're running out of time. But did you know that US and Russian officials will be meeting in Saudi Arabia next week? Were you informed of that before the news broke that they were meeting to discuss Ukraine.
It's absolutely clear that there will be debates between Russia and the United States about this question. I spoke to President Trump very early about how to support Ukraine.
My plea is that there.
Should be first the message to put in that Europe and the United States will continue with their support to Ukraine, because he has to understand that he cannot hope that we stop our support.
But the US officials at this meeting have made clear that Europe's not going to be at the table in any of the important conversations. How can you you're not.
I'm sure that there will be no solution possible over the heads of the Ukrainians. And obviously, if someone wants Europe to be involved in the structures of peace in the future, it is necessary and to discuss with Europe and to implement the European leaders into this decision making processes.
President Trump only seems to want to talk to one person. He doesn't want to talk to Europe. So who should be that one person shouldn't be nominated person to talk to Donald Trump y as how he likes to do business.
I think that the European Union has its own bodies for acting. And on the other hand, I will be very clear it is Europe that spends even more as the United States in the support of Ukraine. And this is the basis for saying that everyone should count with us.
When we spoke a few years ago, we were talking about this before we started that when it was seemed very unlikely in an election campaign where it seemed very unlikely that you would end up as chancellor, and then you were proved right and the doubters were wrong. Do you have a rabbit your sleeve for the next week because the polls you started off far behind and they have not got any better.
I'm sure that that will happen again. What we are rabbit, It will happen again that the Social Democratic Party and myself will get the vote from the people to continue with leading the government.
As it was the case.
What evidence for that, Chancellor?
The people are wondering who is the right one to do this, and they are not decided yet. If we look at the many that have not made up their mind and many things are happening, so it is obvious that in this time the real decision will really happen in the places where the people give up their vote.
What do you think they would need to be deciding on thinking about most in order to change their minds of vote for you?
One important question is One important question is defense and security and peace in Europe. I think they can trust the Antler when it comes to the handling of problems dealing.
With peace and security. It's about growth. I have a very
Concrete proposal how we can increase growth in Germany and it's about social cohesion.