Hans Heinrich Driftmann, president of the German Chambers of Industry and Commerce (DIHK), told daily Frankfurter Allgemeine Zeitung that Merkel’s conservative Christian Democratic Union and their beleaguered coalition partners the pro-business Free Democratic Party were drifting.

“The coalition has unfortunately conveyed a good measure of disorientation in recent weeks,” he said.

In a sign that behind-closed-doors frustrations are exploding into the public arena, Driftmann went on to say that the government was “losing sight of important reforms” and appealed to Merkel and her cabinet to “take the lead again on responsibility for business.”

The centre-right coalition should take advantage of the strong business climate to lay the foundations for future strong growth. In particular, he said the reform of income tax brackets was urgently needed to stop “cold progression” whereby rising incomes gradually push workers into higher tax brackets. This needed to be tackled this year, he said.

The business community could help the government finance the overdue reform of company tax through the reduction of subsidies, he said.

Driftmann also warned that the ageing population was already having effects on the labour market and social system through a shortage of skilled workers.

The Local/djw