BERLIN, June 4 -- Germany's new government on Wednesday launched a package of tax breaks and eventual tax cuts for companies, moving to encourage investment as it tries to give new momentum to an economy that has shrunk for the past two years and is expected to stagnate this year.

Chancellor Friedrich Merz's Cabinet approved the so-called growth booster programme, which must still be passed by lawmakers.

Its central component is a hefty tax write-off on investments in machinery and other equipment over the next three years, followed by a gradual reduction of the corporate tax rate from 15 per cent to 10 per cent between 2028 and 2032, reports AP.

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There will also...