The economy always has a psychological component. When companies trust that they can do good business in the future, they invest strongly. If perspectives seem bad, they retain money.
The coronavirus pandemic, with the collapse of international supply chains, the war in Ukraine, the consequent energy crisis and inflation, the weakening of the Chinese economy … All this hardly affected the German economy, export -oriented.
The economy collapsed and Germany entered a prolonged recession. Since then, optimism has not reappeared. OECD statistics, the Organization for Economic Cooperation and Development in industrialized countries, show that Germany continued to have the lowest investment rate in 2024 compared to the 38 OECD countries.
631 billion euros of investment
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This is going to change, the executives of the main companies in Germany promise. 61 of them, among which are known corporations such as Airbus, Basf, BMW, Deutsche Börse, Mercedes-Benz, Rheinmetall, SAP and Volkswagen, But also US companies Nvidia, Blackrock and Blackstone, They have joined in the initiative “Made for Germany”. The name remembers, not without reason, the German quality seal “Made in Germany”.
Together, companies want to invest 631 billion euros in Germany in the next three years. In production plants, machinery and facilities, as well as in research and development. “We want economic growth, we want to strengthen the competitiveness of Germany, we want to defend or continue expanding our technological leadership,” said one of the two drivers of the initiative, the president of the Board of Directors of the Siemens Group, Roland Busch, after a meeting of the initiative with government members at the Foreign Ministry.
Politics is excited. “Germany has returned, it is worth investing again in Germany,” the Foreign Minister Friedrich Merz, of the Democristian Party CDU, celebrated after the meeting.
Where does this change of mind come from?
The atmosphere in the Foreign Ministry was very good. “We had an excellent exchange,” summarized the president of the Board of Directors of Deutsche Bank, Christian Sewing. But where does this change of mind come from? Germany is still in a delicate economic situation and faces a third consecutive year without growth. Given the tariff policy of the US President, Donald Trump, the perspectives are not good.
However, the course of politics is clearly different. Reactivating the economy is the highest priority of the new government. Since the beginning of May, a coalition formed by the conservative parties CDU/CSU and the Social Democrats is in functions. The first measures have already been agreed. Bundestag and Bundesrat (both parliamentary chambers) have approved a special fund with debt of 500 billion euros for additional public investments in infrastructure and climate protection.
Companies will pay less taxes
The price of electricity for the industry will fall and the economy will benefit from a significant tax reduction. This is something that the economy had constantly claimed, without success, to the previous government, a coalition formed by the social democrats of the SPD, the Greens and the Liberal FDP.
With Friedrich Merz, he now governs a chancellor who has worked for many years in the economic sector. The lawyer Merz was, among other things, president of the Supervision Council of the American financial investor Blackrock.
A new proximity between politics and economics
“Today we have started a new form of collaboration,” said Siemens’s general director, Roland Busch. “The dialogue has shown that politics and economy remake in the same direction.”
Busch believes that, to release the billion announced, the policy should regulate less and give more freedom to companies. The economy requires reforms, especially in terms of bureaucracy and social quotes, which make labor costs more expensive.
Are pensions still safe?
42 percent of the gross national product, that is, of the total economic performance of Germany, is currently allocated to the social budget. And Germany is a country that ages. In order to continue financing pensions, the State must contribute more money to pension boxes every year.
The OECD considers that social security reform is the biggest challenge for Germany as a place of investment. If nothing is changed, the State will have to continue borrowing to be able to maintain social systems. Friedrich Merz has already announced that reforming them is the next point in the political agenda of the coalition.
(md/ms)
