If there is one thing that Germany’s business leaders agree on following the outcome of Sunday’s election nail-biter, it’s the urgent need to form a coalition government capable of tackling a long list of outstanding problems left behind after Angela Merkel’s 16 years as Chancellor.
Germany needs “courageous structural reforms” to bolster its economic competitiveness—and that of Europe overall—Deutsche Bank CEO Christian Sewing said in a statement this week.
“We need a coalition that ushers in a new era,” he said.
Back in 2017, it took nearly six months for Angela Merkel to cobble together a government. This time around, industry executives fear the country doesn’t have the luxury of dithering amid tectonic shifts in markets resulting from the pandemic on one hand and climate change on the other.
“The previous experience—with all its petty tactical games, needless delays and ultimate compromises on the back of the country’s competitiveness—is something many of us still feel in our bones,” a Berlin-based lobbyist for German industry told Coins2Day.
Eager to get started, German industry wasted no time in presenting a catalog of demands for the new government—led by digitalization, decarbonization and de-bureaucratization.
1. Kill the fax machine
One pressing issue businesses face is Germany’s continued reliance on analog (as opposed to digital) information. A tangible example that has come to symbolize how backwards the country remains, often cited on the campaign trail, was bureaucrats’ reliance on fax machines to report COVID cases to public health authorities.
“Business as usual no longer suffices if Germany wants to retain it economic strength,” wrote the CEO of SAP, Germany’s business software giant, on LinkedIn on Wednesday. “Digitalization is the key to safeguard our future. If the next government proceeds with haste and courage to chart the right course, then the digital transformation of Germany can succeed.”
2. Run like the wind
With the EU now enshrining into legislation the goal of carbon neutrality by 2050, major German corporations are no longer dragging their feet on sustainability. Indeed for some it cannot come fast enough.
In his comprehensive 10-point wish list of urgent steps for the next Chancellor, Volkswagen Group chief executive Herbert Diess included calls for the swift expansion of clean, renewable energy capacity and a hike in the price of CO2 to €65 per ton of emissions two years earlier than planned.
Problem is, watertight authorizations for new wind park projects can take five to seven years, according to Markus Krebber, CEO of German utility group RWE. And that makes it difficult—if not impossible—to speed up the energy transition in the way that people like Diess want.
3. Slay the bureaucratic monster
The problems with speeding up Germany’s energy transition feed into another the third main demand voiced by the country’s business community—slay the bureaucratic monster.
The labyrinthine nature of Germany’s planning and permit process has brought the expansion of on-shore wind energy to a crawl and more recently put the brakes on Tesla’s Gigafactory numerous times. And the idea of pouring billions of dollars, like the U.S. Carmaker has, into building an assembly plant that could subsequently be razed to the ground should final zoning approvals be withheld is a risk few German managers are willing to take.
Take RWE. Krebber, its CEO, fears that environmental activists could sue his company to shutter its fossil fuel-burning power plants earlier than planned.
If that happens, and if wind plant permits are delayed to the point that RWE cannot produce enough renewable energy to compensate, the utility group could find itself in an impossible position, as it is obligated by the state to ensure a stable supply of power.
“The whole permit process on the one hand and potential lawsuits on the other has now become such an internal paradox in itself that we no longer have any manoeuvring room at all,” Krebber told Der Spiegel in an interview this month. “It’s as if we’re trapped.”
Christmas deadline
Giving Germany’s business class reason to hope that the country won’t be gripped by post-election political paralysis this time round, leaders of the country’s major parties have broadly committed to a Christmas deadline for forming a coalition that can govern for the next legislative term. And a selfie showing rival German political leaders meeting to find common ground gave businesses gave more cause for optimism.
Selfies only go so far, however, and a spokesman for the electronics manufacturing association ZVEI said industry would hold them to their holiday pledge.
“The goal cannot be that Merkel once more ends up holding the New Year’s address,” he said, referring to a possibility a caretaker government could still be in place when 2022 rolls around. “Issues like digitalization, data, artificial intelligence and climate change are far more pressing than they were four years ago.”
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