Germany's businesses are expressing frustration over government inaction on the stagnating economy as the country awaits the outcome of Sunday's national election. The hope is for a stable two-party coalition led by center-right leader Friedrich Merz as chancellor, but the question remains whether this new government will take the bold action that business leaders are calling for.
Leading economists and business figures in Germany are emphasizing the urgent need for change. Business software maker SAP SE's CEO highlighted the importance of addressing issues such as excessive regulation, lack of digitalization, and a slow economy. Luxury automaker BMW AG stressed the necessity for a competitive tax policy, reduction of bureaucracy, and a business-oriented shift in EU policy.
The sentiment is echoed by the president of the German Chamber of Industry and Commerce, who emphasized the overdue need for a change in direction. The chief of global macro at ING bank emphasized the importance of getting the economy out of its structural stagnation to prevent far-right parties from gaining ground.
Union leaders are also urging swift action, with the head of the IG Metall industrial union calling for investments in energy security, infrastructure, technology, education, housing, and welfare. The head of the Federation of German Industries emphasized the need for courageous and quick action to halt the downward spiral of weak growth.
However, concerns remain about the influence of populist parties on policy decisions. With populist parties holding more than one-third of seats, there are worries about their ability to veto crucial fiscal decisions. This could pose challenges for increasing military spending, supporting Ukraine, and easing the tax burden for workers and firms.
