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Straits Times
a day ago
- Business
- Straits Times
‘Made for Germany': Is Chancellor Merz's industrial push a mere rhetorical reset?
Sign up now: Get ST's newsletters delivered to your inbox German Chancellor Friedrich Merz addresses journalists at the launch of the 'Made for Germany' initiative planning large investments to boost the economy, at the Chancellery in Berlin, on July 21. BERLIN – When Chancellor Friedrich Merz stepped in front of the cameras on July 21 and declared 'Germany is back', the image was designed to inspire confidence. Surrounded by executives from Siemens, Deutsche Bank, BMW and other German corporate heavyweights, Mr Merz presented what he labelled as one of the country's largest investment initiatives in decades: €631 billion (S$938.6 billion) pledged through 2028, under the 'Made for Germany' banner. It was a grand show of unity between government and business at a time when the German economy, Europe's largest, has marginally contracted in each of the last three years. But the symbolism belies a more sober reality. Much of the pledged investment had already been planned. Only a fraction - a still substantial €100 billion – qualifies as new capital. And even that figure is shrouded in vagueness. While impressive on paper, Mr Merz's initiative risks becoming a rhetorical exercise detached from the structural reforms that Germany desperately needs. In that sense, 'Made for Germany' represents less of an economic breakthrough than a narrative reset. Its closest analogues – French President Emmanuel Macron's 'Choose France' summit and Chinese President Xi Jinping's 'Made in China 2025' strategy – have clear agendas. Mr Macron courted foreign capital with tax incentives and regulatory reform, while Mr Xi laid out a centralised roadmap to dominate future tech sectors. Germany's effort, by contrast, is currently still a rather vague call for private investment by its corporate giants and seems more inward-facing. Top stories Swipe. Select. Stay informed. Business S'pore's Q2 total employment rises, but infocomm and professional services sectors see more job cuts Asia Japan issues tsunami warning after 8.8-magnitude earthquake strikes off Russia Singapore Migrant workers who gave kickbacks to renew work passes were conservancy workers at AMK Town Council Singapore 2026 school year to begin from Jan 2 for MOE kindergarten, primary, secondary students Singapore Singapore prepared to recognise State of Palestine in principle, says envoy at high-level UN meeting Business MAS keeps Singapore dollar policy unchanged amid US tariff risks to economy Business S'pore car-sharing firm GetGo launches ZipZap no-deposit car leasing, starting at six months Singapore Escape, discover, connect: Where new memories are made The pivot from 'Made in Germany' to 'Made for Germany' though, signals a shift in ambition. Chancellor Merz wants to move away from branding Germany as a source of globally trusted exports to renewing the industrial foundations at home to bolster its future competitiveness. Mr Merz's goal is not just growth, but a reanimation of Germany's industrial spirit – an effort to restore geopolitical relevance and economic sovereignty at a time of a seismic rejigging of the global economic order. To be sure, Germany remains a leading global manufacturing power – contributing about 26 per cent of the EU's total industrial output and far ahead of France, Italy, or the UK – but the system is showing signs of fatigue. Pressure is also building from outside the European Union (EU). Though European Commission negotiators have brokered with US President Donald Trump to almost halve tariffs on European goods to about 15 per cent, Mr Merz has warned that these tariffs 'pose a serious burden for Germany's export-oriented economy'. And then there is China, paradoxically a rival and an indispensable trade partner, and whose own industrial policy has compounded its overcapacity issues. Many have accused Beijing of exporting its overcapacity to other parts of the world, including South-east Asia and Europe. German automakers and chemical giants rely on Chinese demand, but China's push into electric vehicles, green tech and microchips has turned it into a fierce competitor. Recent talks between China and the EU have yielded little to resolve deep disagreements. Overregulated economy, high energy costs, labour shortages Mr Merz's campaign is therefore an attempt to rewrite Germany's economic story, or at least the way it is told. Many economists would argue that perception drives confidence, and confidence drives investments. The Merz government argues that private investment is the key to unlocking further growth. The economic theory is Keynesian – inject capital now, reignite demand, and rebuild momentum. But caution prevails. While short-term effects may lift the GDP in 2026, the long-term trajectory remains weighed down by unresolved structural burdens. The problem is therefore not a lack of investment promises, but the ecosystem through which those investments must flow. According to a recent report by the German Bundesbank, the country's central bank, Germany's economy could have grown 50 per cent more between 2021 and 2024 if its export industries had not been constrained by labour shortages and regulatory delays. The German economy is overregulated, grappling with high energy costs and sluggish digitalisation. The infrastructure is visibly deteriorating, and despite recent public investment packages – including a €500 billion state fund for climate and transport – progress is slow. At the same time, wage costs are rising, and social contributions are set to increase again in 2026 – all against the backdrop of an ageing population and labour market tensions. All of these structural impediments are in turn manifesting in the form of funding delays, fragmented policymaking, and lagging venture capital inflows, which continue to hinder progress and crimp innovation. Many of these issues in Germany mirror the ones identified in a 2024 report on European competitiveness anchored by Mr Mario Draghi, a former European Central Bank chief. Still, the high-tech strategy within Mr Merz's 'Made for Germany' campaign outlines bold plans: chip plants, AI gigafactories and quantum research labs. Germany even aims to derive 10 per cent of GDP from artificial intelligence by 2030. Strengthening German innovation was one of the priorities that Mr Merz identified for this campaign, but details were scarce at his launch speech. Many experts remain sceptical. A recent OECD report notes that Germany's AI investment remains modest compared to the United States and China, and the commercialisation of research is still weak. Most tellingly, one in four German tech start-ups is considering relocating abroad due to a lack of venture capital, according to a recent Bitkom survey. Bitkom is Germany's digital association, representing more than 2,200 companies in the digital economy. Conspicuous exclusion This tension between ambition and inertia is mirrored in the composition of the Chancellor's 'Made for Germany' initiative. While Mr Merz presents the campaign as a national effort, it is driven largely by major blue chips listed in Frankfurt, such as Siemens and Deutsche Bank. Absent are the small and medium-sized enterprises (SMEs) that make up over 90 per cent of German companies and form the backbone of the country's manufacturing economic base. The omission is not trivial. The most pressing structural reforms – cutting red tape, accelerating permit approvals, reducing non-wage labour costs, and upgrading digital infrastructure – would disproportionately benefit SMEs. Unlike large firms, they often lack in-house capacity to navigate Germany's rigid regulatory ecosystem. A family-run engineering business seeking to expand might wait over a year for zoning or environmental permits, all while grappling with rising payroll costs and outdated broadband infrastructure. Mr Rainer Kirchdörfer, chairman of the Foundation for Family Businesses and Politics, welcomed the initiative's intentions but criticised its skewed composition. 'Family-owned businesses provide 60 per cent of all jobs. They are essential to Germany as a business location,' he said. Yet only three family-owned companies were invited to the launch. What is needed now is not rhetorical inclusion, but policy recalibration. Integrating SMEs into the industrial renewal effort would require targeted reforms – streamlined permitting, better access to venture and growth capital, and relief from inflexible labour costs. Without this, Germany risks cementing a two-speed economy: one where flagship firms receive capital and attention, while the broader Mittelstand – the storied ecosystem of family firms and specialised manufacturers – remains underleveraged. This also points to a deeper structural issue. SMEs are rarely seen as leaders in emerging sectors like AI or quantum computing, which could then lead to a policy and funding bias towards larger firms. But empowering the Mittelstand would localise supply chains, broaden innovation beyond urban hubs and strengthen regional economies. There is no meaningful reindustrialisation without the Mittelstand – and until they are fully embedded in the plan, 'Made for Germany' remains a half-built foundation. Critics across the political spectrum have begun asking whether the new initiative is simply a polished public relations exercise orchestrated by a handful of CEOs and communications consultants. Mr Christian Dürr, head of the liberal Free Democratic Party, put it bluntly: 'This isn't just about meeting with hand-picked CEOs. The entire spectrum of the economy needs to be heard.' Still, there is potential in the initiative if backed by real reform. Germany retains deep technological expertise and a powerful industrial base. The defence sector, for example, is now awash with funds and could become a driver of innovation, especially through dual-use applications. More than just capital, this would require vision, coordination and political courage. 'Made for Germany' offers hope, but for now, little hard evidence of systemic change.
DW
22-07-2025
- Business
- DW
'Made for Germany': German Companies show optimism – DW – 07/22/2025
German Chancellor Friedrich Merz has joined forces with the country's top business leaders, who pledge major investment to pull Germany out of recession. There is always an element of psychology in economics. If companies are confident they can do good business in the future, they will strongly invest. If prospects look poor, they will hold on to the money. The COVID-19 pandemic with its collapse of international supply chains, the war in Ukraine, the subsequent energy crisis and inflation, the weakening economy in China — all took a heavy toll on the export-oriented German economy. Economic activity nosedived. Germany slid into a lasting recession. Since then, optimism has not returned. The Organization for Economic Co-operation and Development (OECD) registered a lower investment ratio for Germany in 2024 than all other 38 member countries. That will soon change, according to the heads of leading companies in Germany. A total of 61 of them, including corporations such as Airbus, BASF, BMW, Deutsche Börse, Mercedes-Benz, Rheinmetall, SAP, Volkswagen but also the US corporations Nvidia, Blackrock and Blackstone — have launched the initiative "Made for Germany." The name is reminiscent, deliberately, of the slogan "Made in Germany" which has become a symbol of quality. Together, the corporations representing a third of the German economy want to invest €631 billion ($733 billion) in Germany over the next three years. The money will go toward new and existing factories, as well as research and development. "We want economic growth, we want to strengthen Germany's competitiveness, we want to defend our technological leadership or extend it further," one of the alliance's two initiators, Siemens chief executive Roland Busch, said following a meeting of the initiative with government politicians at the chancellery. Christian Sewing, chief executive of Deutsche Bank and co-initiator of the alliance alongside Busch, expects even more businesses to join. "Germany is back. It's worth investing in Germany again," said Chancellor Friedrich Merz of the conservative Christian Democrats (CDU) after the meeting. "We stand here before one of the largest investment initiatives that we have seen here in Germany in recent decades. We are not a location of the past, but a location of the present and above all the future," he added. To view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video The mood in the chancellery was clearly positive. However, the economic situation in Germany remains sluggish; the country is facing its third year in a row without growth. Given the tariff policies of US President Donald Trump, the outlook is anything but good. Reviving the economy is the top priority for Germany's new government. The coalition of the center-right Christian Democrats and Christian Social Union (CDU/CSU) and the center-left Social Democrats has been in office since early May. They have made their first steps: The Bundestag federal parliament and Bundesrat upper house have authorized the borrowing of €500 billion ($580 billion) for a special fund for government investment in infrastructure and climate protection. Its intended focus is to whip the country's ailing transport routes into shape, invest in energy networks, digitization and research. Energy prices for the industry will be reduced, and businesses are set for massive tax relief. Initially, investment in production facilities, machinery, equipment, research and development will be accounted for during tax assessments. In the medium term, taxes on business are to be reduced. In Friedrich Merz, Germany now has a chancellor who himself spent many years in business. Among other roles, the lawyer formerly chaired the supervisory board of the US financial investor BlackRock. To view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video "Today we have begun a new form of cooperation," Siemens head Busch said. "The conversation has shown that politics and business are on the same page." Deutsche Bank CEO Sewing added: "In my view, we are experiencing a government that is moving quickly. The most important things — growth and competitiveness — are right at the top of the agenda." To release the announced billions, politicians should ease up on regulations and give companies more freedom, Sewing said. Businesses are calling for reforms, especially concerning bureaucracy and social security contributions which push up the cost of labor. In Germany, employers and employees each pay half of worker contributions to health insurance, unemployment insurance and pensions. Due to higher costs for healthcare, health insurance contributions increased across the board at the beginning of this year. Contributions to long-term care insurance are expected to rise in 2026. In Germany, 42% of the gross national product goes toward social services. Pension funds are the biggest driver of this. Germany is an ageing society, and the baby boomer generation will retire from the workforce in the coming years. In addition, life expectancy is increasing. To afford the old-age pension, the government must contribute more money to the pension funds each year. According to the OECD, reforming social insurance is the biggest challenge for Germany. If nothing changes, the government will need to keep taking on more debt to keep social systems afloat. Chancellor Friedrich Merz has announced that reforming the social system is next on his coalition's political agenda. Initial findings are expected in the coming you're here: Every Tuesday, DW editors round up what is happening in German politics and society. You can sign up here for the weekly email newsletter, Berlin Briefing.
Local Germany
22-07-2025
- Business
- Local Germany
Today in Germany: A roundup of the latest news of Tuesday
Tuesday's top story: German industry alliance lays out domestic investment push More than 60 German companies said Monday they would fund new domestic investments worth at least €100 billion each as Chancellor Friedrich Merz moves to revive Europe's largest economy. Members of the "Made for Germany" initiative said in a statement they would invest a total of 631 billion euros in Germany by 2028. The amount included investments already planned as well as new spending, they said. The pledge was intended as a "strong endorsement of Germany's potential" following recent investment outflows worth hundreds of billions of euros, the signatories said. The initiative was being led by executives from Germany's blue-chip companies, including lender Deutsche Bank and industrial group Siemens. The CEOs of the two German heavyweights were received in the chancellery in Berlin by Merz, who declared that "the message is very clear... it is worth investing in Germany again". German Chancellor Friedrich Merz (R) chats with Blackrock's Germany manager Dirk Schmitz at the launch of the "Made for Germany" initiative on July 21, 2025 at the Chancellery in Berlin. Photo: JOHN MACDOUGALL / AFP Merz's government, which came to office in May with a pledge to revitalise Germany's struggling economy and boost investment, has already approved a sweeping package of corporate tax breaks and loosened constitutional spending limits to plough hundreds of billions into defence and infrastructure. READ ALSO: What's in Germany's giant spending package? Severe weather warnings lifted in Berlin and Brandenburg Despite severe weather warnings, the night in Berlin and the surrounding areas passed without many incidents. The German weather service (DWD) had warned of severe weather with heavy rainfall in large parts of eastern Germany on Monday. At the height of the heavy rain, there were 24 weather-related operations, a spokesman for the Berlin fire department told Tagesspiegel on Monday evening, adding, "That's not a big number". Advertisement A concert by pop superstar Robbie Williams was postponed to Wednesday as a precaution, and an open air performance by opera singer Anna Nebtrenko was also cancelled. Weather in the region is expected to remain wet and windy until Wednesday. Food inspectors busier than ever in Baden-Württemberg A total of 956 business closures were imposed in Baden-Württemberg in 2024, according to the last annual report from the food inspection authority – up from 800 in 2023. In total, inspectors checked around 70,000 businesses last year and found around 9,500 violations during more than 110,000 inspections. According to the report, almost half the violations were related to general hygiene conditions. As an example, the inspectors cite a bar with an ice cube machine which was so neglected that food was no longer fit for consumption. The ice cubes were heavily contaminated with germs and stank of smoke. The report also states that encrustations on the nozzles of the commercial coffee machine had 'led to the formation of stalactite-like formations' after a long period of not being cleaned. Advertisement Germany looks to roll back taxes on flights Germany's government signalled Monday that it may reverse a rise in the tax applied to passenger flights as it steers a pro-business turn in Europe's top economy. Airlines have long complained that the charges in Germany -- aimed in part to reduce carbon emissions -- are among the highest in Europe, harming competitiveness. Germany last hiked the duty in May 2024, with the levy for short-haul flights hitting €15.33, up from €12.73, and that for long-haul routes soaring to €70.83 from €58.06. For comparison, France is planning to increase its tax on economy-class flights to destinations within Europe to €7.30, up from €2.63 now. READ ALSO: Why the prices of flights from Germany are going up Last year's increase under Germany's then-chancellor Olaf Scholz has brought in almost two billion euros since it was imposed but also led to anger from airlines. Reversing the tax rise as part of the 2026 budget is now being discussed between Germany's ruling coalition parties, the conservative CDU/CDU and the centre-left SPD, Bild reported. Budget airlines like Ryanair and German rival Eurowings have long complained about taxes in Germany, and have cut some flights from German airports in recent years. However, that the aviation industry remains one of the biggest beneficiaries of fossil fuel subsidies, and airlines pay fewer levies than railway companies, which is why airfare is often cheaper than overland travel. READ ALSO: 'Denial of reality' - Is Germany's future government ignoring the threat of climate change? Germany, Norway vow to step up North Atlantic surveillance NATO allies Germany and Norway agreed on Monday to step up surveillance against maritime and airborne "threats" in the northern Atlantic region amid high tensions with Russia over the Ukraine war. "Germany and Norway aim to ensure stability and security in maritime areas, including in the High North," said a joint statement released as German Chancellor Friedrich Merz met with Norway's Prime Minister Jonas Gahr Store in Berlin. The two countries also reaffirmed their "unwavering support for Ukraine as it defends its freedom, sovereignty, independence and territorial integrity against Russia's continued war of aggression." German Chancellor Friedrich Merz (R) welcomes Norwegian Prime Minister Jonas Gahr Stoere for talks at the Chancellery in Berlin on July 21, 2025. (Photo by Odd ANDERSEN / AFP) Berlin and Oslo said that "the North Atlantic, including the strategically crucial Greenland-Iceland-United Kingdom (GIUK) and Bear gaps and adjacent waters, and the North and Baltic Seas, are crucial for both Norwegian and German security." This, they said, was why their armed forces trained and patrolled the seas together and "cooperate closely under NATO's Regional Plans", the statement added. Advertisement Germany metal and electrical industry sheds 60,000 jobs since the beginning of 2025 The number of employees in the metal and electrical industry continues to decline. According to a survey of companies conducted by the employers' association Gesamtmetall, around 60,000 jobs have been lost in the sector since the beginning of 2025 alone. According to the association, 3.9 million people were still employed in the industry at the end of 2024. Plans for staff cuts are also increasing noticeably, with one in every two companies in the automotive sector planning more redundancies. With reporting by DPA, AFP and Tom Pugh.
The Star
21-07-2025
- Business
- The Star
Roundup: Germany unveils massive investment plan to boost economy, yet reform seen as crucial
BERLIN, July 21 (Xinhua) -- Germany's government and top corporate leaders on Monday launched a sweeping investment initiative aimed at reviving Europe's largest economy, which has faced prolonged stagnation. But the ambitious plan has met with skepticism, as business leaders warn that meaningful investment depends on long-overdue structural reforms. The initiative, dubbed "Made for Germany," was announced at a business summit attended by German Chancellor Friedrich Merz and executives from leading German and international companies. The plan envisions 631 billion euros (738 billion U.S. dollars) investment through 2028, including already announced projects, and targets key areas such as manufacturing facilities, research and development, and national infrastructure. Alexander Geiser, CEO of communications consultancy FGS Global and a co-initiator of the effort, stated on LinkedIn that over 100 billion euros of the total will come from new capital. However, no further details were disclosed. So far, 61 companies from various sectors have joined the initiative. Alongside founding firms such as Siemens and Deutsche Bank, the list includes BMW, Mercedes-Benz, Volkswagen, Allianz, Airbus, Nvidia, and several high-tech startups. "This is one of the largest investment initiatives we have seen in decades," Merz said, adding that private capital could play a vital role in bolstering public investment. Germany's economy has contracted for two consecutive years and may shrink again in 2025. A lack of public investment for years and a sharp industrial slowdown have worsened the outlook. Business confidence has also declined under the previous government's inconsistent economic policies, causing many companies to hold back on capital spending. In May, the Merz administration announced a separate 500-billion-euro fund aimed at infrastructure development and climate-related projects. It is widely seen as a potential attempt to revive Germany's sluggish investment climate. Rebuilding Germany's industrial standing through advanced technologies has also become a top policy priority. A draft of the government's new Hightech-Agenda unveiled last week outlines investments in artifical intelligence (AI), quantum computing, and climate-neutral energy as key elements of a renewed "Made in Germany" identity. According to the draft, the government plans to build at least three semiconductor plants in Germany, aiming to eventually establish the country as Europe's leading chip production hub. In addition, it targets having AI contribute 10 percent of Germany's GDP by 2030. At Monday's summit, Merz also said the initiative aligns with broader goals of digital transformation and technological innovation. Siemens CEO Roland Busch called it "a new form of cooperation between business and politics." Julia Braune, head of Germany's trade and investment agency GTAI, added that the plan sends a strong message that public and private sectors are working together to reignite economic growth. Still, critics argue that without concrete reforms, the initiative risks being little more than a publicity campaign. Some politicians and economists have questioned the feasibility of fulfilling the investment ambition. As Germany looks to reclaim its role as an industrial and innovation powerhouse, the success of "Made for Germany" may depend less on the billions pledged than on Berlin's willingness to deliver long-promised reforms. Clemens Fuest, president of the ifo Institute, said that publicity alone is not enough. "We need fundamental reforms," he warned, urging the government to reduce bureaucracy and lower taxes. Currently, Germany's investment levels remain 5 percent below their 2019 benchmark. (1 euro = 1.17 U.S. dollar)
Mint
21-07-2025
- Business
- Mint
Companies pledge to invest over $700 billion in Germany over the next 3 years
BERLIN (AP) — A group of dozens of companies pledged Monday to invest at least 631 billion euros ($733 billion) in Germany over the next three years, sending a signal of confidence in Europe's biggest economy as the new government tries to breathe new life into it. The economy has shrunk for the past two years and is expected to stagnate this year. Chancellor Friedrich Merz's administration has made revitalizing it a top priority since it took office May 6. It has launched a program to encourage investment and set up a 500 billion euro fund to pour money into Germany's creaking infrastructure over the next 12 years. It is promising to cut red tape and speed up the country's lagging digitization. On Monday, Merz welcomed representatives of an initiative titled 'Made for Germany' to the chancellery to send a signal of confidence from and to private investors. The group currently includes 61 companies from across the economy, among them industrial conglomerate Siemens and financial giant Deutsche Bank. 'The investments by the initiative are a very powerful signal that we are now experiencing a shift in sentiment and consolidating it," Merz said. 'The message ... is very clear: Germany is back. It's worth investing in Germany again. We are not a location of the past, but a location of the present and above all the future.' He stressed that private investment is crucial to encouraging growth. The overall figure pledged Monday includes at least some already planned investments. Merz said the plans include investments in new facilities and in modernizing infrastructure, in research and development. Deutsche Bank CEO Christian Sewing praised the new government as being 'determined to end the reform backlog that has slowed us down for too long.' But he said that it still needs to do more, and the companies 'encouraged' the government 'to continue the course of reform.'
