If there’s one thing German business leaders agree on after Sunday’s election resultis the urgent need to form a coalition government capable of tackling a long list of outstanding issues left behind after Angela Merkel’s 16 years as Chancellor.
Germany needs “courageous structural reforms” to strengthen its economic competitiveness – and that of Europe as a whole –German Bank CEO Christian Sewing said in a statement this week.
“We need a coalition that ushers in a new era,” he said.
In 2017, it took Angela Merkel nearly six months to concoct a government. This time around, industry executives fear the country will not have the luxury of procrastinating amid tectonic shifts in markets resulting from the pandemic on the one hand and climate change on the other.
“The previous experience – with all its tactical little games, unnecessary delays and ultimate compromises on the back of the country’s competitiveness – is something that many of us still feel in our bones,” said a lobbyist from German industry based in Berlin. Fortune.
Eager to get started, German industry wasted no time in presenting a catalog of demands to the new government, led by digitization, decarbonization and de-bureaucratization.
1. Kill the fax machine
One of the pressing issues facing businesses is Germany’s continued dependence on analogue (as opposed to digital) information. A tangible example that came to symbolize how far the country lags behind, often cited during the election campaign, was the bureaucrats’ reliance on fax machines to report cases of COVID to public health authorities.
“The status quo is no longer enough if Germany is to maintain its economic power,” wrote the CEO of SAP, the German enterprise software giant, on LinkedIn on Wednesday. “Digitization is the key to protecting our future. If the next government moves with haste and courage to chart the right course, then Germany’s digital transformation can succeed. “
2. Run like the wind
With the EU now include in legislation the objective of carbon neutrality by 2050, large German companies are no longer dragging their feet when it comes to sustainability. Indeed, for some, it cannot come quickly enough.
In his comprehensive 10-point wishlist of urgent action for the next chancellor, Volkswagen Group CEO Herbert Diess notably called for a rapid expansion of clean, renewable energy capacity and an increase in the price of CO2 to € 65 per tonne of emissions two years ahead of schedule.
The problem is that final authorizations for new wind farm projects can take anywhere from five to seven years, according to Markus Krebber, CEO of German utility group RWE. And that makes it difficult, if not impossible, to accelerate the energy transition as people like Diess want.
3. Kill the bureaucratic monster
Problems related to accelerating Germany’s energy transition are fueling another third main demand expressed by the country’s business community: to kill the bureaucratic monster.
The labyrinthine nature of Germany’s planning and licensing process has put a strain on the expansion of onshore wind power and more recently put the brakes on Tesla’s Gigafactory on several occasions. And the idea of pouring billions of dollars, like the American automaker, into building an assembly plant that could then be razed if final zoning approvals were denied is a risk few German executives are prepared for. to take.
Take RWE. Krebber, its CEO, fears that environmental activists may sue his company for shutting down its fossil-fueled power plants earlier than expected.
If this happens, and if wind turbine 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 forced by the State to ensure a stable supply of electricity.
“The whole authorization 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 leeway at all,” Krebber said. Der Spiegel in an interview this month. “It’s like we’re trapped.”
Giving Germany’s business class reason to hope that the country will not be plagued by post-election political paralysis this time around, leaders of the country’s main parties have broadly committed to a Christmas deadline for form a coalition that can govern for the next legislature. . And a selfie showing rival German political leaders meeting to find common ground has given companies more reason to be optimistic.
Guten Morgen! 😌pic.twitter.com/hYZHD7tlTH
— Christopher Vogt (@c_vogt) September 29, 2021
The selfies don’t go any further, however, and a spokesperson for electronics manufacturing association ZVEI said the industry will force them to keep their vacation promise.
“The goal cannot be for Merkel to end up giving the New Year’s speech again,” he said, raising the possibility that a caretaker government will still be in place when 2022 arrives. “Issues like digitization, data, artificial intelligence and climate change are much more urgent than they were four years ago.”
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