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Press Release Germany Climate Change

New German Government Promises Businesses Continuity with New Accents

The three-way coalition set to assume power under chancellor-in-spe Olaf Scholz further prioritizes the environmental and digital sectors while maintaining traditional German economic strengths.

Berlin (GTAI) - The leaders of the center-left Social Democrats (SPD), the environmentalist Green Party and the business-friendly Free Democrats (FDP) have agreed a three-way coalition that will form the next German government and see the SPD’s Olaf Scholz replace Angela Merkel as German chancellor.

The coalition agreement, which is entitled “Daring More Progress” and was presented to the public on November 24 in Berlin, follows intense negotiations after the German national election on September 26. The agreement aims to reinforce Germany’s leading economic role in the world and further incentivize climate protection and digitalization.

“More than anything the new government promises stability and a high degree of continuity, embodied in the fact that with Olaf Scholz, Germany’s new chancellor will be its former finance minister,” says Germany Trade & Invest (GTAI) CEO Robert Hermann. “But the presence in the government of two new parties will intensify certain priorities.”

The coalition agreement foresees an annual EUR 50 billion increase in investments in climate protection, digitalization and education. It creates a superministry for both economic affairs and climate. And it highlights environmental topics such as Germany’s transition to clean energy sources, an accelerated phase-out of coal as a power source, the promotion of hydrogen as a renewable energy carrier and increased support for electric mobility.

“The new German government brings with it the promise of further accelerating Germany’s progress in realizing its climate protection goals,” says GTAI Director of Energy, Construction and Environmental Technologies Thomas Grigoleit. “We can expect the government to make a concentrated effort to accelerate the phase-out of coal as an energy source. The expansion of renewables, the creation of a hydrogen economy and infrastructure, and the continuing decarbonization of transportation and logistics will offer a historical chance in growing markets for German and international cleantech companies.”

An equal priority in the coalition agreement is digitalization. The new government has pledged to create a digital state and develop new strategies concerning artificial intelligence and blockchain technology. State support for new businesses and start-ups is to be increased, while bureaucracy will be trimmed to encourage innovation. The coalition agreement upholds the principle of a balanced federal budget and rules out tax increases.

“The business world can look forward to a big boost for digitalization from the new government,” says GTAI Director of the Digital and Service Sector Marc Rohr. “We’re talking about 5G, the comprehensive extension of the fiber optics network to improve access to high speed internet service, measures to lower the cost of energy through digitalization, and new incentive and financing programs for highly innovative and sustainable digital business models.”

The government-in-spe’s newly formulated priorities offer plenty of business opportunities for international companies that set up shop in Europe’s largest market.

“In the coalition agreement, the parties that are set to govern Germany have promised to build upon the country’s many strengths while making improvements in areas where Germany needs to do better,” says Robert Hermann. “It sets out a clear road map for where Germany is headed. So it’s an excellent time for companies whose business activities fit into these aims to expand to Germany and become part of the country’s future.”

The coalition agreement now goes to the three parties as a whole for ratification. The new government under a Chancellor Olaf Scholz is expected to assume power on or soon after December 6.

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