Berlin – After more than 100 days in office, Germany‘s governing coalition is facing increasing pressure from the country’s business community to translate campaign promises into tangible economic policies. Initial enthusiasm surrounding Chancellor Friedrich Merz’s pro-growth agenda is now tempered by a growing demand for demonstrable results.
Merz, who took office following negotiations with the Christian Social Union and the Social Democratic Party, had campaigned on a platform of economic liberalization and increased investment. This initially sparked optimism,particularly with projections of increased spending on national defense and essential infrastructure projects.
Business Leaders Express Mixed Sentiment
Table of Contents
- 1. Business Leaders Express Mixed Sentiment
- 2. Concerns Over Implementation
- 3. Germany’s Economic Trajectory
- 4. Germany’s Economic Challenges: A Deeper Dive
- 5. Frequently Asked Questions
- 6. What specific policy changes are German businesses advocating for to accelerate the deployment of renewable energy projects?
- 7. Germany’s Businesses Urge Berlin to Align Policies with Environmental Leadership Goals
- 8. The Growing Disconnect: Ambition vs. Implementation
- 9. Industry Sectors Leading the Call for Change
- 10. Key Policy recommendations from the Business Community
- 11. The Economic Benefits of pro
top executives are now openly voicing concerns that the momentum is fading. Thomas Schulz,Chief Executive Officer of construction firm Car finger,recently stated that Germany has endured “a minimum of 10,maybe 20,years of weak political decisions” and expressed hope the current administration represents a departure from that pattern.
Oliver Bäte, CEO of Allianz, applauded the government’s renewed focus on bolstering national competitiveness. He emphasized the need for significant investment in crucial areas, including infrastructure, defense, and education, to reverse what he characterized as nearly two decades of underfunding.
In July, a coalition of 61 prominent German businesses announced a collective investment initiative totaling 631 billion euros ($737.4 Billion USD) by 2028, signaling a vote of confidence in the country’s economic future. This ambitious undertaking reflects a shared goal of attracting further investment and solidifying Germany’s position on the global stage.
Concerns Over Implementation
Despite the positive signals, leaders are now stressing the urgency of implementation. Bäte cautioned that while the government’s intentions are favorable, “now comes the delivery.” Similarly, schulz noted that much of the current discussion amounts to “lip service,” requiring swift action to match the promising rhetoric.
Recent surveys bolster these concerns. An assessment by the Ifo Institute and the Frankfurter Allgemeine Zeitung revealed that 30% of economists view the government’s economic policies in its first 100 days as “rather negative,” with an additional 12% deeming them “very negative.” Key criticisms centered around a perceived lack of progress in social security reforms,structural adjustments,bureaucratic reduction,and climate protection initiatives.
Executives have presented extensive wish lists, encompassing structural reforms like accelerated digitalization, streamlined decision-making processes, reduced bureaucracy, a modernized energy transition, and labor market adjustments. Deutsche Telekom CEO Timotheus Höttges specifically highlighted the need for government support in expanding the country’s fiber infrastructure.
Germany’s Economic Trajectory
These calls for action come against a backdrop of recent economic challenges. Germany experienced economic contractions in both 2023 and 2024. While the nation’s Gross Domestic Product saw a modest increase of 0.3% in the first quarter of 2025, it experienced a 0.1% contraction in the following quarter, according to official data.
Carsten Knobel, CEO of Henkel, emphasized the need to address longstanding issues such as bureaucracy, education, security, and energy costs to restore Germany’s global competitiveness and drive sustained economic growth. “We need to turn around this country from a not growing country back to growth,” he stated.
Germany’s Economic Challenges: A Deeper Dive
Germany’s post-pandemic economic recovery has been hampered by several interconnected factors, including global supply chain disruptions, rising energy prices, and geopolitical instability. The country’s reliance on Russian energy imports created vulnerabilities that were exposed by the conflict in Ukraine, forcing a rapid and costly transition to alternative energy sources.
Furthermore, Germany’s aging population and shrinking workforce pose long-term structural challenges. This demographic shift puts pressure on the social security system and limits the country’s economic potential. The need for skilled labor is particularly acute in key sectors such as manufacturing and technology.
Did You Know? Germany is the largest economy in Europe and the fourth-largest in the world by nominal GDP, contributing significantly to the Eurozone’s economic health.
Pro tip: Investors looking for exposure to the German economy should consider Exchange Traded Funds (ETFs) that track the DAX index, which comprises the 40 largest publicly traded companies in Germany.
Frequently Asked Questions
- What is the primary concern of German businesses regarding the new government?
The main concern is the swift and effective implementation of promised economic reforms, moving beyond initial pledges to concrete action.
- What key areas of investment are business leaders pushing for?
business leaders are advocating for increased investment in infrastructure, defense, education, and the energy transition.
- What has been the recent trend in Germany’s economic growth?
Germany’s economy contracted in 2023 and 2024, with modest growth of 0.3% in Q1 2025 followed by a 0.1% contraction in Q2 2025.
- What are some of the structural issues hindering Germany’s economic performance?
Bureaucracy,an aging population,skills shortages,and reliance on external energy sources are key structural challenges.
- What is the “Made in germany” initiative?
A business-led initiative to boost investor confidence and attract 631 billion euros in investment by 2028.
What do you think will be the most critically important hurdle for the new German government in enacting its economic agenda? Share your thoughts in the comments below!
Do you beleive Germany can regain its position as a leading global economic powerhouse, and if so, what steps are crucial for achieving that goal?
What specific policy changes are German businesses advocating for to accelerate the deployment of renewable energy projects?
Germany’s Businesses Urge Berlin to Align Policies with Environmental Leadership Goals
germany, long considered a global leader in environmental sustainability and the energy transition (Energiewende), is now facing increasing pressure from its own business community to solidify that position through more decisive and aligned government policies. A growing chorus of industry voices is calling on Berlin to move beyond enterprising targets and implement concrete measures that foster green innovation, climate action, and a truly sustainable economy. This isn’t simply about altruism; businesses recognize the economic opportunities inherent in a proactive approach to environmental regulations and climate change mitigation.
The Growing Disconnect: Ambition vs. Implementation
For years, Germany has championed ambitious climate goals, including achieving climate neutrality by 2045. However, recent criticisms highlight a significant gap between stated intentions and actual policy implementation. Businesses argue that current regulations are frequently enough fragmented, bureaucratic, and lack the long-term certainty needed to justify significant investments in renewable energy, circular economy initiatives, and sustainable technologies.
Specifically,concerns center around:
Permitting Delays: Lengthy and complex permitting processes for renewable energy projects (wind,solar,hydrogen infrastructure) are hindering progress.
Inconsistent Carbon Pricing: The effectiveness of Germany’s carbon pricing mechanism is debated, with calls for a more predictable and higher carbon price to incentivize emissions reductions.
Lack of Infrastructure: Insufficient investment in grid infrastructure to support the increasing influx of renewable energy is a major bottleneck.
Regulatory Uncertainty: Frequent changes in environmental regulations create instability and discourage long-term planning for businesses.
Industry Sectors Leading the Call for Change
The pressure isn’t coming from a single sector.A diverse range of German businesses are actively advocating for policy alignment.
Automotive Industry: Facing the shift to electric vehicles (EVs), companies like Volkswagen and BMW are urging faster expansion of charging infrastructure and continued support for battery technology progress. They also emphasize the need for a clear regulatory framework for sustainable supply chains in battery production.
Chemical industry: A traditionally energy-intensive sector, the German chemical industry (BASF, bayer) is investing heavily in green chemistry and carbon capture technologies. They require supportive policies, including access to affordable green hydrogen and streamlined permitting for carbon capture and storage (CCS) projects.
Manufacturing sector: The mittelstand – Germany’s backbone of small and medium-sized enterprises – is increasingly focused on resource efficiency and circular economy models. They need financial incentives and technical assistance to adopt these practices.
Energy Companies: RWE and E.ON are pushing for accelerated deployment of renewable energy sources and modernization of the electricity grid. They advocate for a more market-based approach to energy policy and a clear roadmap for phasing out fossil fuels.
Key Policy recommendations from the Business Community
German businesses have presented a series of concrete policy recommendations to the government:
- Streamline Permitting Processes: reduce bureaucratic hurdles and accelerate the approval process for renewable energy projects and sustainable infrastructure. Digitalization of permitting is a key component.
- increase Carbon Pricing: Implement a more ambitious and predictable carbon price to incentivize emissions reductions across all sectors.
- Invest in grid Infrastructure: Significantly increase investment in the electricity grid to accommodate the growing share of renewable energy. This includes expanding transmission capacity and developing smart grid technologies.
- Promote Green Finance: Expand access to green finance and provide financial incentives for businesses investing in sustainable technologies and practices. This includes ESG (Environmental, Social, and Governance) investing.
- Foster Innovation: Increase funding for research and development in green technologies and support the commercialization of innovative solutions.
- Develop a Circular Economy Strategy: Implement a comprehensive circular economy strategy that promotes resource efficiency, waste reduction, and the development of closed-loop systems.
