TEGERNSEE, GERMANY — An array of prominent German business leaders, economists, and politicians gathered in the charming Bavarian town adjacent to the scenic Tegernsee lake last week to express their aspirations and deliberate on the challenges facing the new government.
On the heels of improving market sentiments regarding Europe’s largest economy, participants at the summit collectively urged the new administration to deliver on its campaign pledges. Attendees cautioned that any miscalculations would likely be met with resistance, with several business figures highlighting the need for the government to avoid a “lazy summer.”
Despite a backdrop of rain and overcast skies, which lent a somewhat somber tone to the occasion dubbed the “Davos of Germany,” the summit was infused with a sense of optimism regarding potential reforms under newly appointed Chancellor Friedrich Merz, generating an energetic atmosphere among attendees.
Expectations for the government were high, as concerns over Germany’s economic struggles and political instability seemed to wane.
The German DAX index has risen by over 18% since the start of the year, frequently setting new records in recent months. Despite this, the economy has been mired in stagnation for more than two years, with the tensions surrounding economic, fiscal, and budget policies from the previous ruling coalition continuing to dampen prospects.
“There are very high hopes now on the new government,” stated Patrick Trutwein, chief risk officer and chief operating officer at IKB Deutsche Industriebank AG, during a panel discussion moderated by Finance Newso’s Annette Weisbach.
He conveyed optimism about Germany’s outlook, highlighting the recently approved major fiscal package integrated into the constitution, potential reforms, and an economy that remains “pretty robust” with the capacity to enhance its own productivity and capabilities.
Matthias Voelkel, CEO of Boerse Stuttgart Group, echoed this sentiment, expressing optimism contingent on the new government taking effective action. “If we look ahead and if they [the new government] do the right thing, I’m optimistic,” he told Finance Newso.
Audi CEO Gernot Döllner added during a fireside chat that he is hopeful for the new government to “send an impulse into the German economy.”
Meanwhile, positivity was palpable in Germany’s automotive industry, which has faced fierce competition from China, challenges associated with the shift to electric vehicles, and recently imposed U.S. tariffs.
“The Germans are back,” declared Hildegard Müller, president of the German Association of the Automotive Industry, while speaking to Finance Newso’s Weisbach on Friday. “We are competitive,” she insisted.
Yet amid the prevailing optimism, it was evident that observers are closely monitoring the government’s every action.
“This new government in Germany cannot allow itself a political lazy summer, I’m sorry; they’ve got to work and they’ve got to work hard,” stated Karl-Theodor zu Guttenberg, chairman of Spitzberg Partners and former German politician.
Veronika Grimm, a member of the German Council of Economic Experts, underscored this sentiment, indicating to Finance Newso that, “A lot lies ahead for the government.”
The overarching message was unmistakable: Germany must act decisively.
Alexander Horn, the general manager of Eli Lilly’s Germany arm, expressed strong support for the new government’s objectives, insisting no room exists for ambiguity. “Specifically, we expect that the declarations of intent that are in the coalition agreement will be implemented quickly; speed plays an enormously big role,” he said during a panel, according to a Finance Newso translation.
Voelkel from Boerse Stuttgart Group indicated his hope hinged on governmental action, emphasizing the need for “less bureaucracy, less anti-growth regulation, more innovation, and particularly strengthening investment.”
The newly established German government has committed to many of these objectives, promising to invigorate the economy, reduce bureaucratic hurdles, and foster innovation and investment during its election campaign and within its coalition agreement.
“This country needs an economic turnaround. After two years of recessions, the previous government had to announce a zero growth year for 2025 again, and we really have to work on this,” German Economy Minister Katherina Reiche told Finance Newso on the sidelines of the summit.
