Germany’s businesses want Berlin to walk its talk

Germany’s new government has been in power for just over 100 days now, and business leaders say its time to turn policy promises into reality.

Chancellor Friedrich Merz campaigned on a pro-business and pro-economic growth platform, vowing reforms and investment that sparked hope in the business community. Optimism was further boosted when coalition negotiations between Merz’s Christian Democratic Union, alongside its sister party the Christian Social Union, and the Social Democratic Party, triggered a major fiscal shift that is set to enable higher spending on defense and infrastructure.

The CDU, CSU, and SPD now form Germany’s coalition government, and the sense of enthusiasm from businesses has persisted as the coalition’s political term has gotten underway, according to business leaders who have spoken to CNBC in recent weeks.

“We have, as you heard before, a minimum of 10, maybe 20, years of weak political decisions, very ideologically driven, not business driven, not society driven, and it seems to be that the new government is going in a different direction,” Thomas Schulz, CEO of construction company Bilfinger, said earlier this month.

Elsewhere, financial services provider Allianz’s CEO Oliver Bäte welcomed the new government’s approach to take competitiveness seriously, with Merz having repeatedly pledged to get Germany’s industry back on track to push for global leadership.

“I can only applaud them for taking it seriously, to also mobilize financial reserves to put an unheard of investment program into place, and also end almost two decades of lethargy of under investment in infrastructure, under investment in military, defense [and] under investment in education,” he said.

Leading German businesses in July announced their own initiative, with the goal of boosting investor interest and confidence. The group made up of 61 companies plan to collectively invest 631 billion euros [$737.4 billion] by 2028.

“This is a good signal, and it shows that there is an alliance between [the] corporate world and the politics these days, which is very important, which hasn’t been the case over the last years,” Timotheus Höttges, the CEO of Deutsche Telekom told CNBC.

The tone struck by business leaders is also reflected in recent data, with economic institute Ifo reporting improvements in company sentiment for five consecutive months now.

However, businesses are also calling the government to action, demanding that campaign promises be turned into reality.

Allianz’s Bäte told CNBC that while the government’s attitude was good news, “now comes the delivery,” and Bilfinger’s Schulz noted that “there is at the moment only lip service in a lot of areas, with very good ideas, but we have to come to execution.”

Economists surveyed on policy by Ifo and German news organisation Frankfurter Allgemeine Zeitung also noted the lack of measures that have been implemented so far during Merz’s term.

“30% of the participating economists rate the economic policy measures of the new German government in the first 100 days as ‘rather negative’, with a further 12% even rating them as ‘very negative,'” the survey found.

Participants negatively highlighted “the lack of reform efforts in the area of social security systems. In addition, they see a lack so far of clear stimulus for further structural reforms, the reduction of bureaucracy, and progress on climate protection,” it noted.

Business leaders had an extensive wish list to share with CNBC.

Roland Busch, CEO of tech conglomerate Siemens, was among those who called for structural reforms. Some of which included “digitalization, faster decision processes, less bureaucracy, working [on] our energy transformation” and changes to the labor market.

Business-specific needs were also called out by leaders, with Deutsche Telekom’s Höttges saying the company could be supported by local authorities and the federal government in its build out of fibre infrastructure.

Many of these issues were also flagged by leaders as reasons for the economic weakness of recent years. Germany’s economy contracted in both 2023 and 2024. Europe’s largest economy then recorded gross domestic product growth of 0.3% in the first quarter followed by a 0.1% contraction in the following period, according to data, in the second quarter.

“In Germany, we have not been growing as a country in the last two years, and there are reasons behind that. It’s about bureaucracy, it’s about education, it’s about security, about energy prices, and in that context, being competitive on a global scale,” Carsten Knobel, CEO of chemicals and consumer goods business Henkel, noted.

“But we need to turn around this country from a not growing country back to growth,” he said.