German companies demand stability and fast actions on growth – DW – 24/02/2025

Germany’s economy has been fighting for more than two years, entering a third year probably recession in 2025, after the gross domestic product in the largest economy in Europe has decreased by 0.2% and 0.3% in 2024, respectively 2023.

Against the backdrop of a terrible economic situation, the previous decision of the three -part coalition of Chancellor Olaf Scholz was voted from office in the general elections on Sunday, and its provocative, Friedrich Merz is about to take the power of power. The Merz Alliance of the Christian Democratic Union (CDU) and its Bavarian sister, the Christian Social Union (CSU), won 28.5% of the votes, Social -Scholz Democrats coming to only 16.4%.

The two parties are likely to form the following government after Merz has excluded looking for an extremely right-wing AFD alliance of the second most powerful party in the new Parliament with 20.8%-CSU wants to avoid a coalition The ecological green, whose support decreased to 11.6%.

Stable government a priority for enterprises

The German business community can be relieved by the result of the elections. The Institute of Economic Research in Cologne (IW) found in a pre-electoral study that most companies considered a coalition with extremely straight AFD as “extremely problematic for the German economy.”

After a few months of uncertainty following the collapse of the previous government, companies now want political stability and a government that is capable of pushing the necessary urgent reforms, including pro-increasing policies.

“Given the huge challenges, it is good for Germany as a business location that CDU and SPD have, although with a thin margin, a majority,” Knut Bergmann told DW Bergmann.

“Continuation of stagnation”

However, Alexander Kritikos, a member of the Board of Directors of the German Institute for Economic Research (DIW), sees the result of different elections.

“In a big coalition, I finally saw a continuation of the stagnation that Germany has experienced during the 16 years from Angela Merkel in office,” he told DW, mentioning how CDU/CSU/SPD He failed to create great economic dynamism during 12 years, led together during Merkel’s reign. Even in the four years in which CDU ruled with free Democrats (FDP), there was not too little economic dynamism. “I would have expected a greater will to reform from a black-green coalition,” said Kritikos, referring to the colors of the Black Party of the CDU.

Rainer Dulger, the president of the German Employers Federation (BDA), also wanted a different result, saying the German business daily Handelsblatt that a coalition of conservatives and Pro-Business FDP would have best accentuated the government concentration on restoring Germany’s competitiveness.

Extreme parties threaten to upset key reform

The growth of German extremist fringes further complicates the reform of a key element of German policy: the so-called debt brake that limits fresh loans to only 0.35% of the annual GDP. The Constitution was consecrated in the Constitution to maintain the low German debt, but it is said to have urgently prevented public investments.

Bergmann IW also said that it is particularly problematic, because the mainstream parties do not have the majority of two thirds in the new Parliament to modify the Constitution to reform the debt brake or to pass special funds.

In addition, the massive AFD earnings, which doubled its result compared to the 2021 choices, worry about business leaders, because they are afraid of negative consequences when they urgently recruit foreign workers.

Diw’s Kritikos believes that AFD rhetoric could favor a “more racist atmosphere against foreigners.”

A recent IW survey expresses its comments, as almost half of the business associations in Germany have reported difficulties in their sectors in attracting foreign workers in the regions where AFD is the strongest.

Also, a national survey conducted in March 2024 by the German Center for Integration and Migration Research (Desim) found that almost one in ten people with a migration fund seriously takes into account Germany because of the AFD advance.

Elias Steinhilper, a researcher at Desim, believes that the study was “not just a snapshot”. By showing the fall of AFD earnings in recent choices and anti-storage feeling in the election campaign, he told DW that this is likely to encourage more people with migration environments to consider Germany.

Business requests for the new government

Marie-Chistine Ostermann, the head of an association representing the numerous family-owned businesses, now hopes that extremist parties will “lose influence” as parties in the political center “addresses the challenges of the country”.

“We need a stable coalition and the ability to act quickly, because deindustrialization in Germany is in full swing,” she said for DW.

The list of requirements from business leaders is long. They request reductions in bureaucracy, fiscal reforms, several infrastructure investments, an acceleration of digitalization, a better education and migration policy, as well as the management of commercial conflicts and the accessible energy for the country.

Kritikos also advocates for more honesty on the political realm, especially in terms of the demographic disorder that Germany faces. “Because of the demographic changes, there are only two options: if we want a better infrastructure, we have to work more or finance it through debts,” he said.

And Jochen Stanzl, a financial analyst at the CMC Markets, says the most demanding task would be to get along with the return of US President Donald Trump and possible commercial conflicts. “Because any prolonged situation in which Trump threatens and there is no clear response from Berlin, he will depreciate the mood on the trading floor.”

Friedrich Merz expressed the hope that a new government will be in force until the Easter holidays.

This article was initially written in German.