Germany's new economy boss has a plan — and it starts with risk, speed and big bets
Global Economy May 9, 2025
09 May 2025, Bavaria, Gmund Am Tegernsee: Katherina Reiche (CDU), Federal Minister for Economic Affairs and Energy, takes part in the Ludwig Erhard Summit. Representatives from business, politics, science and the media are taking part in the three-day summit. Photo: Sven Hoppe/dpa (Photo by Sven Hoppe/picture alliance via Getty Images)
Picture Alliance | Picture Alliance | Getty Images
Germany needs to take more risks and boost its stagnant economy with a decade of investment in infrastructure, German Minister for Economic Affairs and Energy Katherina Reiche said Friday.
'The next decade will be the decade of infrastructure investments in bridges, in energy infrastructure, in storage, in maritime infrastructure… telecommunication. And for this, we need speed. We need speed and investments, and we need private capital,' Reiche told CNBC's Annette Weisbach on the sidelines of the Tegernsee summit.
While 10% of investments could be taken care of with public money, the remaining 90% relied on the private sector, she said.
The newly minted economy minister also addressed regulation coming from Brussels, warning that it could hinder companies from investments and start-ups from growing if it is too restrictive. Germany has had to learn that investments comes with risks 'and we have to kind of be open for taking more risks,' she said.
Initiating regulatory changes will in fact be one of the most important jobs for the new German government, Veronika Grimm, member of the German Council of Economic Experts, told CNBC on the sidelines of the Tegernsee summit.
'It will be important to adjust regulation, so removing or changing innovation-stifling regulation so that more is possible again in many areas of technology,' she said in comments translated by CNBC. Read More China Launches Sea and Air Drills Around Taiwan
'And then of course it is about improving the environment or businesses, making it more attractive so that we are competitive again,' Grimm said. On the edge of recession
Germany's economy contracted slightly on an annual basis in both 2023 and 2024 and the quarterly gross domestic product has been flipping between growth and contraction for over two years now, just about managing to avoid a technical recession. Preliminary data for the first quarter of 2025 showed a 0.2% expansion.
Forecasts do not suggest much of a reprieve from the sluggishness, with the now former German government last month saying it still expects the economy to stagnate this year.
'This country needs an economic turnaround. After two years of recessions the previous government had to announce again [a] zero growth year for 2025 and we really have to work on this. So on the top of the agenda is an investor booster,' economy minister Reiche said.
Lowering energy prices, stabilizing the security of energy supply and reducing bureaucracy were among the key points on the agenda, she added.
This is despite a major fiscal U-turn announced earlier this year, which included changes to the country's long-standing debt rules to allow for additional defense spending and a 500-billion-euro ($562.4 billion) infrastructure package.
Several of Germany's key industries are under pressure. The auto industry for example is dealing with stark competition from China and now faces tariffs, while issues in housebuilding and infrastructure have been linked to higher costs and bureaucratic hurdles.
Trade is also a key pillar for the German economy and therefore uncertainty from U.S. President Donald Trump's changing tariff policies are weighing heavily on the outlook.
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