After more than 100 days of Chancellor Friedrich Merz’s government, German business leaders are nervously asking: when will campaign promises finally turn into concrete reforms? While 61 leading companies have prepared a package worth 631 billion euros through 2028, warning voices from the boardrooms of Germany’s largest corporations are becoming increasingly urgent – demanding immediate structural changes in an economy that has declined for two consecutive years.
Merz’s Government Ended Austerity and Opened State Coffers
The new government coalition composed of Friedrich Merz’s CDU (Christian Democratic Union), CSU (Christian Social Union) and SPD (Social Democratic Party) completed coalition negotiations with a fundamental fiscal turnaround – simply put, the government decided to spend more on investments instead of saving. This move sparked the first wave of optimism in business circles after years of stagnation.
Thomas Schulz, CEO of construction company Bilfinger, described the previous period as “at least 10, maybe 20 years of weak political decisions, very ideologically driven”. Oliver Bäte from insurer Allianz praised the government’s decision to mobilize financial reserves and end “almost two decades of lethargy in the form of underinvestment in infrastructure, military, defense and education”. This approach of the German government to investments has also attracted attention from foreign stakeholders monitoring Europe’s largest economy.
Positive sentiment is confirmed by data from the Ifo economic institute (Germany’s largest think-tank), which has recorded improvement for the fifth consecutive month.
German Companies Responded with Massive Investments Worth 631 Billion Euros
In response to government signals, leading German corporations presented their own initiative in July. A group of 61 companies committed to jointly invest 631 billion euros (737.4 billion dollars) through 2028 under the name “Made for Germany”. This investment in Germany represents unprecedented cooperation between the private sector and politics.
The initiative was officially presented directly at the chancellery, which according to Deutsche Telekom CEO Timotheus Höttges shows that “today there is an alliance between the corporate world and politics, which is very important and has not been the case in recent years”. The program focuses on four key areas for the future of the German economy:
- Digitalization and industrial modernization
- Energy transformation and sustainable technologies
- Infrastructure projects and transportation networks
- Research and development in strategic sectors
Experts Criticize Pace, Government Launches Digital Reforms
Despite growing business optimism, the expert community remains more cautious. The latest Ifo institute survey showed that 42% of surveyed economists rate the government’s steps in the first 100 days rather negatively, mainly due to the absence of concrete structural reforms (changes in basic state and economic systems). While experts positively view the creation of an infrastructure and defense fund with potential for short-term growth, they warn about the lack of long-term systemic changes.
Business leaders across sectors identify digitalization and bureaucracy reduction as top priorities for future development. The government has already responded with several concrete steps. In May, it established the Ministry for Digital Transformation and State Modernization, which is to accelerate the deployment of digital solutions, artificial intelligence and optical network development. It also recently approved legislation considering CO₂ capture and storage projects (CCS/CCU – emission reduction technologies) as “public interest,” simplifying approval processes.
Nevertheless, according to Bilfinger’s Schulz, “currently, in many areas it’s just empty talk with very good ideas, but we must move to implementation.” Analysts are monitoring the ministry’s results and the pace of infrastructure project approvals.
German Economy Needs Quick Turnaround After Two Years of Decline
The urgency of reforms is underlined by the current state of the German economy. The country recorded GDP decline in both 2023 and 2024. This year’s first quarter brought 0.3% growth, which was however replaced by a 0.1% decline in the second quarter.
Carsten Knobel from chemical company Henkel summarized the main structural problems: “It’s about bureaucracy, education, security, energy prices and in this context about competitiveness at the global level.” According to him, it’s crucial to “turn this country from non-growing back to growth.”
Impact on German Economy in Coming Months
The current situation creates a specific environment for markets with high potential but also significant risks. Massive corporate investments worth 631 billion euros signal confidence in the long-term potential of the German economy, while political support for infrastructure projects opens new areas of interest in construction, energy and technology.
The construction sector benefits from infrastructure projects, energy from CO₂ technologies, and telecommunications companies like Deutsche Telekom and Siemens from digitalization, with German market analysis for 2025 showing significant growth potential in these key sectors.
The key factor will be the speed of implementing promised reforms. If the German government fails to deliver concrete steps in digitalization and bureaucracy reduction by year-end, initial optimism may quickly turn into harsh criticism. Merz’s government thus faces a crucial test: either turn promises into reality, or risk losing confidence from both stakeholders and the public.
