The CDU/CSU and SPD have agreed on a coalition agreement. The central theme is the renewal of the promise of the social market economy. The coalition promises to create the conditions for a competitive and growing economy and to stengthen social cohesion.

The special infrastructure fund is intended to create a functioning infrastructure as the basis for prosperity, social cohesion and future viability. The state wants to reduce bureaucracy in its services, for example by simplifying public procurement law, speeding up planning law and reducing administrative regulations.

Companies will feel the immediate impact of deregulation. For example, the Supply Chain Due Diligence Act is to be suspended until the implementation of the European Supply Chain Directive CSDDD. The Working Hours Act is to be made more flexible by introducing a weekly maximum working time instead of a daily one. Overtime bonuses are to become tax-free. Further tax incentives for pensioners and part-time workers are intended to alleviate the shortage of skilled labour.

Here is an overview of what else is in store for companies.

Labour law

A number of agreements were reached on labour law: The minimum wage is to continue to be set by an independent minimum wage commission. However, orientation criteria are to be defined according to which a minimum wage of 15 euros could be achieved by 2026.

The future government wants to strengthen the trade unions and collective bargaining. The coalition partners have agreed on the law on collective bargaining planned by the traffic light coalition. The law is to apply to contracts at federal level worth 50,000 euros or more. For start-ups with innovative services, a contract value of 100,000 euros is to apply as a reference value in the first four years after their foundation. Trade unions are to be given digital access to companies that corresponds to their analogue rights. There should also be tax incentives for trade union membership.

The obligation to record working hours electronically should be regulated in an unbureaucratic manner with appropriate transitional rules for small and medium-sized enterprises. Trust-based working hours are to remain possible in principle. A new proposal is to make the Working Hours Act more flexible and to replace the maximum daily working hours with a maximum weekly working time.

There are also to be tax incentives for overtime and continued work after retirement. Among other things, overtime bonuses are to become tax-free.

Climate protection and sustainability

The future government is committed to the German and European climate targets and is pursuing the goal of climate neutrality by 2045. At the same time, Germany is to remain an industrialised country. 100 billion euros are to be made available from the special fund for climate protection and the climate-friendly restructuring of the economy.

In order to achieve the target, the main focus is on CO₂ reduction and the offsetting of negative emissions and reduction efforts in partner countries. The Paris Agreement, the German Climate Protection Act and the European Emissions Trading System (ETS) are to form the framework for this. The EU 2040 target of a 90 per cent reduction in emissions compared to 1990 is also supported, but only under certain conditions.

Emissions trading is to remain the central control instrument, supplemented by CO₂ pricing. The coalition partners are in favour of the further development of the European Green Deal and the Clean Industrial Act as well as the introduction of the ETS2 from 2027. The national BEHG is to be seamlessly transferred.

To avoid price jumps for citizens and companies, social compensation measures are planned, financed by the European Climate Social Fund, among others. CO₂ revenues are to be returned to households and companies. Particularly affected sectors will receive unbureaucratic compensation. There are currently no plans for agriculture to opt into the ETS2.

The coalition partners want to abolish the German Supply Chain Sustainability Act (LkSG). However, Germany will once again need a supply chain law to implement the European Supply Chain Directive CSDDD.

Energy policy

The coalition partners want to permanently reduce energy prices by at least 5 cents/kWh. Measures include a reduction in electricity tax, a reduction in levies and grid charges, as well as special relief for energy-intensive companies.

The energy supply is to be increased and renewable energies further expanded. Dependencies are to be reduced and innovative technologies strengthened. The expansion and modernisation of the grids is to be advanced and synchronised with the expansion of renewables.

Energy-intensive industries are to become climate-neutral in the long term. A legislative package on CO2 capture and storage technologies and utilisation technologies is to be presented.

In addition, the hydrogen economy is to be rapidly expanded, including the improvement of hydrogen imports and the utilisation of funding instruments.

Planning and authorisation procedures are to be accelerated and made less bureaucratic. Measures include the continuation of the federal-state process and the swift implementation of RED III.

The future government also plans to push ahead with grid expansion and modernisation and adapt it to renewable energies.

The coalition partners want to make the electricity system more flexible by expanding storage facilities and making them more system-friendly. They also support combined heat and power generation and plan to adapt the Combined Heat and Power Generation Act (KWKG) to the challenges of a climate-neutral heat supply by 2025. The EU Internal Gas Market Directive is to be implemented swiftly.

Nuclear energy was discussed in the coalition negotiations, but does not appear in the coalition agreement.

Building industry

A key concern of the coalition partners is a reform of the building code. A draft bill for a so-called “housing construction turbo” is to be presented in the first 100 days of the new government. Among other things, this envisages lowering planning law hurdles and speeding up approval procedures.

In addition to changes to planning law, comprehensive relief is planned in the area of technical specifications. In future, a deviation from the recognised rules of technology will no longer automatically be considered a defect.

The coalition partners have clearly identified serial, modular and systemic construction as a key strategy for accelerating residential construction.

The building sector should make a relevant contribution to achieving the climate targets. Nevertheless, the “Heating Act” is to be abolished and the new GEG is to be more open to technology and more flexible. The scope for implementing the European Buildings Directive (EPBD) should be utilised.

The existing funding structure in the area of residential construction is to be reorganised. In future, two centrally bundled KfW programmes are to be available – one for new construction and one for modernisation. Funding for the Efficiency House Standard 55 (EH55) is to be made possible again for a limited period of time.

Digital and technology law

The future government wants to make Germany more digitally independent and also strengthen European interfaces. In line with the EU Data Act, the future digital policy should promote a culture of data utilisation and data sharing in order to tap into the economic potential of data.

In order to strengthen Germany as a data centre location, the nationwide expansion of fibre optics is to be driven forward.

Germany should be positioned as a leading location for digital future technologies, with a focus on industry-specific AI leap innovations. The adaptation of the AI Act and the promotion of AI real-world laboratories for SMEs and start-ups are therefore important measures for the next government.

The digital transformation of the administration is to be driven forward through the introduction of the Deutschland-ID and EUDI wallet as well as the modernisation of registers.

Reducing bureaucracy and modernising the

The coalition is striving for a networked and user-friendly administration that works consistently digitally and in many cases without applications. It wants to create a centralised digital platform for administrative services where everyone has a digital identity.

The state is to be streamlined: At least eight per cent of staff in ministries and the Bundestag administration are to be cut by 2029. As part of an administrative reform, the more than 950 federal authorities are to be reduced by merging them and reducing redundancies. Interdepartmental cooperation is to be strengthened.

The coalition also wants to make legislation more efficient. Administrative processes are to be automated and accelerated, in particular through the use of AI. Citizens and companies should only have to provide information once.

The coalition plans to abolish 20 per cent of federal administrative regulations and reduce bureaucratic costs for businesses by a quarter.

The judiciary is also to become more efficient through the digitalisation and acceleration of procedures. A centralised justice portal and the use of AI are to be introduced. It should also be possible to conduct civil proceedings online.

To ensure that the funds from the Special Infrastructure Fund have a faster impact, the possibilities for accelerating planning and approval, procurement and awarding are to be utilised and regulated in an Infrastructure Future Act.

Financial sector

The future government wants to set up an investment fund for energy infrastructure to provide equity and debt capital for investments, combining public guarantees and private capital.

Occupational pension schemes are to be strengthened and private pension schemes reformed. Employee share ownership schemes are to be increasingly used as an incentive instrument. The Riester pension is also to be reformed and transferred to a new pension product.

The government wants to promote standardised European financial regulation and do away with gold plating. Cash is to be retained, but digital payment options are to be gradually introduced. The incoming government also supports a digital euro.

The CDU/CSU and SPD want to strengthen the European banking union and create a legally secure framework for fund investments in infrastructure and renewable energies.

The future government would like to review the regulation of crypto assets, the grey capital market and shadow banks for gaps and close these where necessary.

Foreign trade

The coalition partners want the “EU-only” principle to apply to trade agreements. They are endeavouring to conclude further trade and investment agreements and support the ratification of agreements that have already been signed. Trade relations with the USA are particularly important to them, where they are aiming for a free trade agreement in the medium term and want to avoid a trade conflict in the short term.

The new government is planning to amend the Foreign Trade and Payments Act in the near future. Review procedures are to be accelerated and simplified. Foreign investments in critical infrastructure and strategically relevant areas are to be effectively prevented.

The European strategy for economic security is to be implemented in a national strategy. The highest security requirements should apply to critical infrastructure components. German SMEs are to be better protected against cyber attacks; companies are to receive support in implementing the Cyber Resilience Act, among other things.

The coalition partners are sticking to the sanctions against Russia and Belarus and want to extend tariffs for these countries.

Export authorisation processes are to be simplified. Random checks with penalties are to replace inspections.

Automotive industry

The automotive and supplier industry should remain a key industry and job guarantor. The promotion of regional transformation networks is to be continued beyond 2025. The coalition partners want openness to technology. Penalties due to fleet limits are to be prevented and CO₂ targets for heavy commercial vehicles and trailers are to be reviewed in advance.

The electrification of vehicle fleets is welcomed, but a statutory quota is rejected. E-mobility should be promoted through purchase incentives. Planned measures include tax breaks for electric company cars up to 100,000 euros, a special depreciation allowance for electric vehicles and vehicle tax exemption until 2035 as well as the expansion of the charging network and toll exemption for zero-emission lorries. The hydrogen charging infrastructure for commercial vehicles is to be subsidised.

Other strategically important industries

Strategically important industries are to be strengthened in a targeted manner in order to secure Germany as a business location in the long term.

The steel industry should be supported in the transformation to climate neutrality – for example through CCS technologies and increased recycling of steel scrap. The future German government is committed to the continuation of international protective measures.

Germany is to be developed into the world’s most innovative location for the chemical, pharmaceutical and biotechnology industries. A Chemicals Agenda 2045 and a risk-based regulatory framework are planned. Biotechnology is to be promoted as a key industry. The pharmaceutical industry is to benefit from a further developed national pharmaceutical strategy to promote the production of medicinal products and medical devices. Germany should also become a leading location in the field of microelectronics.

The future government wants to strengthen Germany’s role in space travel, including through greater involvement in the ESA, its own earth observation and communication systems and participation in lunar and successor projects to the ISS.

Aviation is to become more modern, more climate-friendly and more competitive. To this end, international connections are to be improved and fair conditions for sustainable aviation fuel (SAF) are to be sought.

In the maritime industry, the coalition partners are focussing on competitiveness in shipbuilding, modern port infrastructure and maritime research. Offshore projects by German shipyards are to be subsidised.