Economic and Industry Leaders have High Hopes for New German Government

December 2021

The mood is positive as Olaf Scholz from the center-left Social Democrats (SPD) becomes the ninth chancellor of the Federal Republic of Germany, succeeding Angela Merkel after 16 years. Chancellor Scholz’s three-way coalition with the environmentalist Greens and business-friendly Free Democrats  (FDP) generally has the heads of economic institutes and trade organizations looking brightly toward the future.

“The coalition agreement is balanced and ambitious,” Marcel Fratzscher, the president of the German Institute for Economic Research (DIW) said in a statement. “It’s balanced because it places equal emphasis on three goals: climate protection, digital transformation and social renewal.”

“The coalition’s planned investments are financed by multiple instruments,” said Clemens Fuest, president of leading economic think-tank Ifo. “Firstly, (Germany’s economic development bank) KfW will play a major role and will be equipped with additional capital if necessary. In this way, investments of significant volume can be financed. Secondly there are indications that, within the framework of the national government special assets in 2021 and 2022, credit will be taken out to finance transformational projects in the years to come. That means, in essence, the creation of a kind of budgetary reserve fund.”

The attitude of Germany’s industry associations is likewise mostly upbeat.

“In their coalition agreement, the SPD, the Greens, and the FDP have confronted the enormous challenges facing German industry,” said the Federation of German Industries in a statement. “This includes the modernization of the state by accelerating planning and approval procedures, the transition of industrial Germany to climate neutrality and self-confident policies toward Europe and the rest of the world. The significance of industry and its innovative power is represented very clearly and positively in many central parts of the agreement. It’s something to build on.”

“It’s to be welcome that the coalition parties have come out strong in favor of a robust European banking and capital market characterized by competition and variety of business models,” said Marija Kolak, president of the National Association of German Cooperative Banks (BVR). “At the same time, proven medium-sized business structures and solutions, which bring a high degree of stability, won’t be disrupted.”

“Right now, we need to address the important questions for the future, especially digitalization and decarbonization,” said Achim Berg, president of digital industry association bitkom. “I’m pleased that the coalition agreement explicitly acknowledges the significance of both of these epochal processes of transformation.”

Representatives of smaller businesses are also happy.

“This is quite good,” said Christian Miele, chairman of the Federal Association of German Start-Ups. “As a start-up association, we welcome the fact that the coalition agreement places such emphasis on start-ups. It’s super that the coalition has put on their agenda the issues of employee profit-sharing, start-up financing, a simplified procedure for awarding public contracts and the ability to found a company within 24 hours.”

German Chancellor Olaf Scholz ©    Bundesministerium der Finanzen / Photothek / Thomas Koehler