FRANKFURT, Germany — The stagnation of Germany’s economy has left the business sector feeling frustrated with the current government’s lack of decisive action. As a national election approaches this Sunday, there is a growing hope among business leaders for the establishment of a stable coalition between the conservative parties and the center-left Social Democrats. Many are looking to center-right leader Friedrich Merz to take on the role of chancellor, but the question remains: will he respond swiftly to the urgent calls from the business community?
Prominent figures from various sectors have shared their perspectives on the pressing issues at hand. Christian Klein, the CEO of SAP SE, a leading business software company, emphasized the necessity for bold measures to address critical problems like excessive regulation, poor digitalization, and sluggish economic growth. He remarked, “Germany desperately requires a government willing to embrace innovation and a competitive spirit while dismantling overregulation that hampers our progress and growth.”
The luxury automotive industry, represented by BMW AG, has also voiced its expectations for the new federal government. Their stance is clear: they hope for quick, comprehensive, and sustainable reforms that enhance the business landscape for German industries dealing with heightened global competition. Essential elements of this transformation include a competitive tax plan, the pragmatic reduction of bureaucratic hurdles, and a business-friendly approach within the European Union’s policy landscape.
Peter Adrian, CEO of Triwo AG and president of the German Chamber of Industry and Commerce, noted that the impressive voter turnout of 82.5% reflects a broader societal understanding of the critical choices awaiting the new government. He asserts that a change in direction is seriously overdue.
Carsten Brzeski, the global macro chief at ING, highlighted the overarching need for the new administration to rejuvenate the economy, which is currently mired in structural stagnation. He warned that if the coalition’s primary focus is merely on preventing far-right party AfD from gaining further power, they might overlook crucial economic reforms, which risks their success in future elections.
Thorsten Groeger, who leads the IG Metall industrial union in the regions of Lower Saxony and Saxony-Anhalt, raised concerns about increasing job cuts and the hesitance among companies to invest locally. He stressed the urgency of allocating billions toward energy security, upgrading infrastructure such as roads and rail lines, ensuring high-speed networks, promoting innovative technologies, facilitating robust education, and providing affordable housing to support a comprehensive welfare system.
Peter Leibinger, representing the Federation of German Industries, urged political parties to grasp the critical state of the economy and act decisively and collaboratively. He warned against the growing cycle of underinvestment and minimal growth, which poses significant risks.
Holger Schmieding, chief economist at Berenberg Bank, offered a sobering outlook regarding the political landscape. He noted that populist factions, including both the AfD and leftist parties, now hold over a third of the legislative seats, giving them the power to obstruct any attempts to ease fiscal constraints that are constitutionally mandated. In a critical period where increased military spending and relief for firms and workers are needed, Germany might find it challenging to create the necessary fiscal capacity to support these initiatives.
In conclusion, the forthcoming elections hold significant implications for Germany’s economic future, with business leaders and economists alike calling for immediate and effective action from the new government to steer the country away from stagnation into a path of growth and innovation.
