German Chancellor Friedrich Merz vowed on Wednesday to make Europe's biggest economy competitive again after the cabinet approved measures aimed at reducing bureaucracy and making it quicker and easier to do business through AI and digitisation.

"We are aware of the problems facing the German economy at the moment, but we aspire to return to the top," Merz said at a press conference at the Borsig Palace on Berlin's outskirts.

Under Merz, Germany has shifted away from decades of fiscal discipline to pass a half-trillion-euro infrastructure and defence package aimed at jump-starting growth in the only G7 economy that has contracted for the last two years.

A study by the Information and Forschung (research) economic institute in November showed that excessive bureaucracy costs Germany near

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