Merz announces economic renewal: A new era for Germany!

Merz announces economic renewal: A new era for Germany!

In a recent government statement, Chancellor Friedrich Merz (CDU) urged the coalition and citizens to work together for Germany's economic renewal. The black-red coalition faces major challenges, and the coalition agreement outlines the desired measures. However, Merz is aware that the current plans are not sufficient to cover the necessary reform needs, especially in the restructuring of the welfare state.

The “new basic understanding” for dealing with entrepreneurs that Merz is striving for should give the economy more freedom of action. In this context, CDU Economics Minister Katherina Reiche emphasizes the need for greater personal responsibility on the part of companies. An important element in checking the seriousness of this new direction is the government's announced 100-day program.

Reform projects and touchstones

A central test of the new economic approach is the Working Hours Act, which is to be replaced by a more flexible European regulation. In addition, the coalition plans to eliminate existing supply chain due diligence requirements. Merz has already announced that this repeal could also affect the EU rules, but this has been strongly criticized by SPD Vice-Chancellor Lars Klingbeil.

The coalition agreement stipulates that the abolition of the national Supply Chain Due Diligence Act (LkSG) will take place in a differentiated and staggered manner. This law, which regulates due diligence obligations regarding human and environmental rights for companies of a certain size and above, has placed high demands on companies since its introduction. Critics particularly criticize the reporting requirements that have applied to large companies since January 1, 2023 and to those with more than 1,000 employees since January 1, 2024. Violations can be punished with significant fines of up to 8 million euros or up to 2% of annual turnover.

Future legal framework

The Federal Office of Economics and Export Control (BAFA) has suspended reporting obligations until December 31, 2025. Germany is also obliged to implement the European Supply Chain Directive CSDDD by 2027, which was passed on July 26, 2024. In order to meet the requirements of the directive, comprehensive changes are necessary. The coalition also plans to enact a new international corporate responsibility law by July 26, 2027.

Furthermore, the EU Deforestation Regulation (EUDR), which comes into force on December 30, 2025, is expected to be defused. This requires information and risk analyzes for certain raw materials with regard to their freedom from deforestation. In order to offer large corporations more reliability in the use of general terms and conditions (GTC), a reform of the control of general terms and conditions for contracts between large companies is planned.

These reform projects are intended not only to reduce bureaucratic burdens, but also to promote closer cooperation with other EU countries in order to promote free trade and the protection of external borders. Merz emphasizes that Germany can overcome its challenges on its own, provided the government implements the necessary measures and acts actively in Brussels. The coming months will be crucial in assessing whether the coalition can actually implement the desired changes.

The platforms provide a deeper insight into the proposed measures and their effects FAZ and KPMG Law detailed analyzes and current developments.