May 9, 2025, Bavaria, Gmund Am Tegernsee: Katherina Reiche (CDU), Federal Minister of Economic and Energy, will be participating in the Ludwig Erhard Summit. Representatives from business, politics, science and media are taking part in the three-day summit. Photo: Sven Hoppe/DPA (Photo by Sven Hoppe/Picture Alliance by Getty Images)
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German Economic Affairs Minister Katharina Reich said Germany’s economy and energy minister should take more risks and boost a stagnant economy with a decade of investment in infrastructure.
“The next decade will be a decade of investment in bridges, energy infrastructure, storage, maritime infrastructure and infrastructure in telecommunications. And this requires speed and investment and private capital.
While 10% of the investment could be looked after with public funds, the remaining 90% was dependent on the private sector, she said.
The newly minted economy minister also tackled regulations from Brussels, warning that excessive restrictions on investments and startups could hinder growth. Germany had to learn that investments involve risk.
Initiating regulations changes is in fact one of the most important tasks for the new German government, a member of the German Council of Economic Experts, told CNBC about a bystander at the Tegernsee summit.
“It’s important to adjust regulations, so it’s important to remove or change regulations that reduce innovation so that more can be done in many areas of technology,” she said in a comment translated by CNBC.
“And of course, it’s about improving the environment and the businesses, making it more attractive and making us competitive again,” Grimm said.
At the edge of the recession
Germany’s economy is contracted slightly each year for both 2023 and 2024, with quarterly gross domestic product flying between growth and contraction for more than two years. Preliminary data for the first quarter of 2025 showed an expansion of 0.2%.
The forecast is not a prediction last month that the former German government still expects the economy to stagnate this year, and does not suggest much of the reprieve from the slowdown.
“The country needs an economic change. After two years of recession, the previous government had to announce again (a) There is zero growth year in 2025, and we really need to work on this.
She added that reducing energy prices, stabilizing the security of the energy supply and reducing bureaucracy is one of the key points on the agenda.
This includes changes to the country’s longstanding debt rules that allow for additional defence spending and an EUR 50 billion ($562.4 billion) infrastructure package, despite major fiscal U-turns announced earlier this year.
Some of Germany’s major industries are under pressure. For example, the automotive industry is dealing with tough competition with China and is currently facing tariffs, but housing construction and infrastructure issues are linked to higher costs and bureaucratic hurdles.
Trade is also an important pillar of the German economy, and therefore the uncertainty from President Donald Trump’s changing tariff policy is heavy on the outlook.
