Made for Germany, economic giants unite for investments

Not "Made in Germany", but "Made for Germany" - Economic giants unite and promise billion-dollar investments in Germany.

Economics is always a bit of psychology. This was also seen at the recent investment summit, held with Chancellor Friedrich Merz, because when companies are sure that they will do well in the future, they invest seriously. If the outlook looks bleak, they curb their investments.

The economic crisis has been going on for several years

The coronavirus pandemic and international supply problems, the war in Ukraine, the energy crisis and inflation, the slowdown in the Chinese economy - all of these have hit the export-oriented German economy hard. Germany has been in recession ever since.

Statistics from the Organization for Economic Co-operation and Development (OECD) in industrialized countries show that Germany will again have the lowest investment rate among all 38 members in 2024.

631 billion euros of investment pledges - Made For Germany

But that is now set to change. At least according to the promise of the heads of major companies operating in Germany. 61 of them, including Rheinmetall, SAP, Volkswagen, BMW, Mercedes, Airbus, the German stock exchange - but also American giants such as Nvidia, BlackRock and Blackstone are joining forces in an initiative called "Made for Germany".

The name was not chosen by chance: it recalls the famous German quality seal "Made in Germany". Together, the economic giants plan to invest 631 billion euros in Germany over the next three years - in production facilities, machinery and equipment, as well as in research and development. "We want economic growth, we want to strengthen Germany's competitiveness, we want to protect and expand our technological advantage," said one of the two initiators, Siemens CEO Roland Busch, after a meeting with businessmen and politicians from the German government in the Chancellery in Berlin.

Merz: "Germany is back"

In terms of economic importance, these 61 companies represent about a third of the German economy. Christian Zewing, head of Deutsche Bank and another initiator of the initiative, assumes that more companies will join them.

The common goal is for Germany to once again become a "growth engine for a strong Europe." "There have rarely been better opportunities than now - international investors and companies are willing to invest in our economy. They value Germany as a stable and reliable partner, especially in these unstable times," said Zewing.

Politicians are delighted. "Germany is back, it's worth investing in Germany again," said Chancellor Friedrich Merz (CDU) after the meeting. "We are facing one of the biggest investment initiatives in recent decades. We are not an economy of the past, but of the present and above all of the future."

Where did this change of mood come from?

The atmosphere at the business summit with the Chancellor was excellent. "We had an excellent exchange of views," summed up Christian Zewing. But where did the turnaround come from? Germany is currently still in economic difficulties and is facing a third consecutive year of no economic growth. Add to this the threatening tariff policy of US President Donald Trump, and the prospects are anything but good.

However, the political course is now clearly different. Reviving the economy is once again the absolute priority of the new federal government. Since the beginning of May, the coalition of conservative parties, the CDU/CSU and the Social Democrats have been taking concrete steps. The first steps have already been taken - Germany will take on huge debts.

The Bundestag and Bundesrat have approved a special fund of 500 billion euros, intended for additional state investments in infrastructure and climate protection. This includes investments in the renovation of dilapidated roads, energy networks, digitalization and research.

The price of electricity for industry will be reduced and the economy will be significantly relieved of its tax burden. First of all, by making investments in production facilities, machinery, plants, as well as in research and development, which are mainly recognized when calculating taxes. In the medium term, a permanent reduction in some taxes for companies is also planned. This is exactly what the economy demanded from the previous government, consisting of the SPD, the Greens and the FDP, but without success. The current government has promised to change policies, and this change has begun.

A new rapprochement between politics and business

"Today we have started a new form of cooperation," said Siemens chief Roland Busch. "The conversation showed that politics and business are moving in the same direction." Deutsche Bank chief Christian Zewing added: "I think we have a government that is taking an important step. The most important things - growth and competitiveness - are at the top of the agenda."

In their opinion, for companies to invest the promised billions, politics must reduce regulations and give companies more freedom.

The economy is particularly in need of reform when it comes to bureaucracy and social security contributions, which significantly increase labor costs. Employers and employees in Germany bear the costs of mandatory health, pension and unemployment insurance equally. Health insurance contributions increased significantly at the beginning of the year, and a new increase has already been announced for 2026.

What will happen to pensions?

A full 42 percent of gross domestic product - that is, total economic output - now goes to social funds. The biggest burden is borne by pension funds. Germany is a rapidly aging country. For the state to continue financing pensions, it must allocate more and more funds from the budget every year.

The OECD considers social security reform to be the biggest challenge for Germany's economic future. If nothing changes, the state will have to borrow more and more to maintain its social system.

Federal Chancellor Friedrich Merz has announced that social reform will be the next item on the coalition's political agenda. The first results are expected in the fall./ DW (A2 Televizion)