Germany news: Coalition agrees package to boost growth

Germany news: Coalition agrees package to boost growth Published July 2, 2026last updated July 2, 2026What you need to know - Chancellor Friedrich Merz says his coalition has approved a 'catalogue of significant reforms' after coalition talks in Berlin - The package includes €10 billion in income tax relief, an end to phone-based sick notes and plans to implement pension reforms - Germany's Federal Constitutional Court has upheld a ban on sex dolls with childlike features - A fire at a hospital in northern Germany has killed two patients Here is a roundup of the latest headlines from Germany on Thursday, July 2, 2026: Court upholds ban on childlike sex dolls in Germany Germany's top court has upheld a ban on sex dolls with childlike features. The Federal Constitutional Court rejected constitutional complaints against the law, ruling that restrictions on personal rights are justified. The regulation, introduced in 2021, criminalizes the production, sale, purchase and possession of such dolls. The complainants had argued the law violated their right to sexual self-determination, but the court disagreed. Under the law, producing or distributing the dolls can carry prison terms of up to five years, while possession or purchase can lead to up to three years in jail or fines. What did the other coalition leaders say? Appearing alongside Chancellor Friedrich Merz at the chancellery garden press conference, the three other leaders of the coalition parties enthusiastically hailed the reforms. The co-leader of the center-left Social Democrats (SPD), Finance Minister Lars Klingbeil, said he believed the reforms would enjoy widespread pubic support, with an emphasis on fairness. The coalition had "agreed on solutions that can be supported by a broad majority of our society," said Klingbeil, adding that he was "firmly convinced that these decisions will give our country new strength." SPD co-leader Bärbel Bas said the package would "indeed ensure that the economy grows again, that we achieve growth and secure jobs, while maintaining social balance, and, above all, that we strengthen cohesion within our country." Meanwhile, the leader of Bavaria's conservative Christian Social Union, Markus Söder, described the package as "well-rounded." Each coalition partner would have liked to see more in certain areas, he said. "But a coalition means compromise." "We are making progress," said Söder. While the package was not a "big bang" in itself, he noted, it was another step away from economic stagnation. Merz coalition agrees sweeping reform package Germany's centrist coalition government has agreed on a broad package of reforms as it seeks to revive a sluggish economy and push through key changes after its first year in office. Chancellor Friedrich Merz said his conservative CDU/CSU bloc and the center-left Social Democrats (SPD) had approved a "catalogue of significant reforms" to modernize the economy and restore competitiveness. The announcement came at a press conference, with Merz alongside SPD leaders Bärbel Bas and Lars Klingbeil, as well as the leader of Bavaria's conservative Christian Social Union, Markus Söder. The four coalition leaders had met in Berlin the previous day to hammer out the final details. Measures include €10 billion ($11.4 billion) in income tax relief, the end of phone-based sick notes, and the implementation of pension commission proposals by the end of 2026. "We are providing relief to employees and businesses by cutting taxes and reducing bureaucracy. We have now completed our first year of reform. From the very beginning, we set an agenda serving a single goal: We want to get Germany moving again. It is now clear that this is possible," Merz said. With his party lagging behind the far-right Alternative for Germany party in polls, Merz faces pressure to pass reforms to reinvigorate Europe's largest economy but has struggled to overcome wrangling within the coalition. Welcome to our coverage Guten Tag from the DW newsroom in Bonn. You join us as Germany's coalition says it has agreed on a broad reform package aimed at getting the country's sluggish economy moving again. The package comes as the government faces pressure to show results after a difficult first year in office, with weak growth and Germany's competitiveness high on the political agenda. In other news, Germany’s top court has upheld a ban on sex dolls with childlike features, rejecting complaints against the law. Stick with us for these stories and more of the things that Germany is talking about today.