Katherina Reiche, Germany’s Federal Minister for Economic Affairs and Energy, emphasized the necessity for the nation to embrace greater risks while addressing its flagging economy through substantial infrastructure investments over the next decade. Speaking on the sidelines of the Tegernsee summit, Reiche outlined the urgent need for accelerated investment, highlighting areas such as bridges, energy infrastructure, storage solutions, maritime infrastructure, and telecommunications.
“The next decade will be the decade of infrastructure investments… And for this, we need speed. We need speed and investments, and we need private capital,” Reiche asserted in an interview with Finance Newso’s Annette Weisbach.
The minister stated that while public funding could cover approximately 10% of the anticipated investment needs, an overwhelming 90% must be sourced from private enterprises.
Reiche also raised concerns regarding regulatory frameworks from Brussels, warning that overly stringent regulations could stifle corporate investments and inhibit the growth of start-ups. “Germany has learned that investment involves risks, and we must be open to accepting more of those risks,” she added.
Veronika Grimm, a member of the German Council of Economic Experts, highlighted the importance of regulatory reform as a pivotal task for the new German administration. “It will be important to adjust regulation, so removing or changing innovation-stifling regulations so that more is possible again in many areas of technology,” she stated during discussions at the summit.
Additonally, Grimm emphasized the need to enhance the business environment to rekindle competitiveness, saying, “And then of course it is about improving the environment for businesses so that we are competitive again.”
On the edge of recession
The German economy has faced slight contractions on an annual basis throughout 2023 and 2024, with GDP figures oscillating between periods of growth and decline for more than two years, narrowly evading a technical recession. However, early statistics for the first quarter of 2025 indicate a marginal expansion of 0.2%.
Forecasts lack optimism regarding a turnaround in economic conditions, as the preceding government recently projected stagnation for the economy in 2025.
“This country needs an economic turnaround. After two years of recessions, the previous government had to announce again a zero growth year for 2025, and we really have to work on this. At the top of the agenda is an investor booster,” said Minister Reiche.
Key priorities include lowering energy costs, ensuring energy supply stability, and minimizing bureaucratic obstacles, she further asserted.
This focus on reform occurs despite a significant fiscal shift earlier this year, which involved amendments to Germany’s longstanding debt guidelines to facilitate increased defense spending alongside a massive 500-billion-euro ($562.4 billion) infrastructure initiative.
Germany’s essential industries, including the automotive sector, are currently under significant strain. The auto industry, for example, faces fierce competition from China and is now contending with tariffs, while challenges in housing and infrastructure projects have been exacerbated by rising costs and bureaucratic processes.
Moreover, international trade remains a fundamental aspect of the German economy, and the unpredictability stemming from U.S. tariff policies poses substantial risks to future economic prospects.
