{"id":305836,"date":"2025-07-31T05:48:24","date_gmt":"2025-07-31T05:48:24","guid":{"rendered":"https:\/\/www.europesays.com\/uk\/305836\/"},"modified":"2025-07-31T05:48:24","modified_gmt":"2025-07-31T05:48:24","slug":"made-for-germany-is-chancellor-merzs-industrial-push-a-mere-rhetorical-reset","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/uk\/305836\/","title":{"rendered":"\u2018Made for Germany\u2019: Is Chancellor Merz\u2019s industrial push a mere rhetorical reset?"},"content":{"rendered":"

BERLIN \u2013 When Chancellor Friedrich Merz stepped in front of the cameras on July 21 and declared \u201cGermany is back\u201d, the image was designed to inspire confidence.<\/p>\n

Surrounded by executives from Siemens, Deutsche Bank, BMW and other German corporate heavyweights, Mr Merz presented what he labelled as one of the country\u2019s largest investment initiatives in decades: \u20ac631 billion (S$936 billion) pledged through 2028, under the \u201cMade for Germany\u201d banner. <\/p>\n

It was a grand show of unity between government and business at a time when the German economy, Europe\u2019s largest, has marginally contracted in each of the last three years.<\/p>\n

But the symbolism belies a more sober reality. Much of the pledged investment had already been planned. Only a fraction \u2013 a still substantial \u20ac100 billion \u2013 qualifies as new capital. And even that figure is shrouded in vagueness.<\/p>\n

While impressive on paper, Mr Merz\u2019s initiative risks becoming a rhetorical exercise detached from the structural reforms that Germany desperately needs. In that sense, \u201cMade for Germany\u201d represents less of an economic breakthrough than a narrative reset. <\/p>\n

Its closest analogues \u2013 French President Emmanuel Macron\u2019s \u201cChoose France\u201d summit and Chinese President Xi Jinping\u2019s \u201cMade in China 2025\u201d strategy \u2013\u00a0have clear agendas. Mr Macron courted foreign capital with tax incentives and regulatory reform, while Mr Xi laid out a centralised road map to dominate future tech sectors. <\/p>\n

Germany\u2019s effort, by contrast, is still a rather vague call for private investment by its corporate giants and seems more inward-facing. <\/p>\n

The pivot from \u201cMade in Germany\u201d to \u201cMade for Germany\u201d, though, signals a shift in ambition. Mr Merz wants to move away from branding Germany as a source of globally trusted exports to renewing the industrial foundations at home to bolster its future competitiveness.<\/p>\n

Mr Merz\u2019s goal is not just growth, but a reanimation of Germany\u2019s industrial spirit \u2013 an effort to restore geopolitical relevance and economic sovereignty at a time of a seismic rejigging of the global economic order. <\/p>\n

To be sure, Germany remains a leading global manufacturing power \u2013 contributing about 26 per cent of the EU\u2019s total industrial output and far ahead of France, Italy or Britain \u2013 but the system is showing signs of fatigue. <\/p>\n

Pressure is also building from outside the European Union. <\/p>\n

Though European Commission negotiators have brokered a deal with US President Donald Trump to almost halve tariffs on European goods to about 15 per cent, Mr Merz has warned that these tariffs \u201cpose a serious burden for Germany\u2019s export-oriented economy\u201d. <\/p>\n

And then there is China, paradoxically a rival and an indispensable trade partner, and whose own industrial policy has compounded its overcapacity issues. <\/p>\n

\"\"<\/p>\n

German Chancellor Friedrich Merz addresses journalists at the launch of the ‘Made for Germany’ initiative planning large investments to boost the economy, at the Chancellery in Berlin, on July 21.<\/p>\n

PHOTO: AFP<\/p>\n

Many have accused Beijing of exporting its overcapacity to other parts of the world, including South-east Asia and Europe.<\/p>\n

German automakers and chemical giants rely on Chinese demand, but <\/p>\n

China\u2019s push into electric vehicles,<\/p>\n

<\/a> green tech and microchips has turned it into a fierce competitor. Recent talks between China and the EU have yielded little to resolve deep disagreements.<\/p>\n

Mr Merz\u2019s campaign is therefore an attempt to rewrite Germany\u2019s economic story, or at least the way it is told. Many economists would argue that perception drives confidence, and confidence drives investments.<\/p>\n

The Merz government argues that private investment is the key to unlocking further growth. The economic theory is Keynesian \u2013 inject capital now, reignite demand, and rebuild momentum. <\/p>\n

But caution prevails. While short-term effects may lift the gross domestic product in 2026, the long-term trajectory remains weighed down by unresolved structural burdens. <\/p>\n

The problem is therefore not a lack of investment promises, but the ecosystem through which those investments must flow.<\/p>\n

According to a recent report by the German Bundesbank, the country\u2019s central bank, Germany\u2019s economy could have grown 50 per cent more between 2021 and 2024 if its export industries had not been constrained by labour shortages and regulatory delays.<\/p>\n

The German economy is over-regulated, grappling with high energy costs and sluggish digitalisation. The infrastructure is visibly deteriorating, and despite recent public investment packages \u2013 including a \u20ac500 billion state fund for climate and transport \u2013 progress is slow. <\/p>\n

At the same time, wage costs are rising, and social contributions are set to increase again in 2026 \u2013 all against the backdrop of an ageing population and labour market tensions.<\/p>\n

All of these structural impediments are in turn manifesting in the form of funding delays, fragmented policymaking and lagging venture capital inflows, which continue to hinder progress and crimp innovation. <\/p>\n

Many of these issues in Germany mirror the ones identified in a 2024 report on European competitiveness anchored by Mr Mario Draghi, a former European Central Bank chief.<\/p>\n

Still, the high-tech strategy within Mr Merz\u2019s \u201cMade for Germany\u201d campaign outlines bold plans: chip plants, AI gigafactories and quantum research labs. Germany even aims to derive 10 per cent of GDP from artificial intelligence (AI) by 2030. <\/p>\n

Strengthening German innovation was one of the priorities that Mr Merz identified for this campaign, but details were scarce at his launch speech. <\/p>\n

Many experts remain sceptical. A recent Organisation for Economic Cooperation and Development report notes that Germany\u2019s AI investment remains modest compared with the US and China, and the commercialisation of research is still weak.<\/p>\n

Most tellingly, one in four German tech start-ups is considering relocating abroad due to a lack of venture capital, according to a recent Bitkom survey.\u00a0Bitkom is Germany\u2019s digital association, representing more than 2,200 companies in the digital economy.\u00a0<\/p>\n

This tension between ambition and inertia is mirrored in the composition of the \u201cMade for Germany\u201d initiative. While Mr Merz presents the campaign as a national effort, it is driven largely by major blue chips listed in Frankfurt, such as Siemens and Deutsche Bank. <\/p>\n

Absent are the small and medium-sized enterprises (SMEs) that make up over 90 per cent of German companies and form the backbone of the country\u2019s manufacturing economic base.\u00a0 <\/p>\n

The omission is not trivial. The most pressing structural reforms \u2013 cutting red tape, accelerating permit approvals, reducing non-wage labour costs and upgrading digital infrastructure \u2013 would disproportionately benefit SMEs. <\/p>\n

Unlike large firms, they often lack in-house capacity to navigate Germany\u2019s rigid regulatory ecosystem. A family-run engineering business seeking to expand might wait over a year for zoning or environmental permits, all while grappling with rising payroll costs and outdated broadband infrastructure.<\/p>\n

Professor Rainer Kirchdorfer, chairman of the Foundation for Family Businesses and Politics, welcomed the initiative\u2019s intentions but criticised its skewed composition. <\/p>\n

\u201cFamily-owned businesses provide 60 per cent of all jobs. They are essential to Germany as a business location,\u201d he said. Yet only three family-owned companies were invited to the launch.<\/p>\n

What is needed now is not rhetorical inclusion, but policy recalibration. <\/p>\n

Integrating SMEs into the industrial renewal effort would require targeted reforms \u2013 streamlined permitting, better access to venture and growth capital, and relief from inflexible labour costs.<\/p>\n

Without this, Germany risks cementing a two-speed economy: one where flagship firms receive capital and attention, while the broader Mittelstand \u2013 the storied ecosystem of family firms and specialised manufacturers \u2013 remains underleveraged.<\/p>\n

This also points to a deeper structural issue. SMEs are rarely seen as leaders in emerging sectors like AI or quantum computing, which could then lead to a policy and funding bias towards larger firms. <\/p>\n

But empowering the Mittelstand would localise supply chains, broaden innovation beyond urban hubs and strengthen regional economies. <\/p>\n

There is no meaningful reindustrialisation without the Mittelstand \u2013 and until SMEs are fully embedded in the plan, \u201cMade for Germany\u201d remains a half-built foundation.<\/p>\n

Critics across the political spectrum have begun asking whether the new initiative is simply a polished public relations exercise orchestrated by a handful of chief executives and communications consultants. <\/p>\n

Mr Christian Durr, head of the liberal Free Democratic Party, put it bluntly: \u201cThis isn\u2019t just about meeting with hand-picked CEOs. The entire spectrum of the economy needs to be heard.\u201d<\/p>\n

Still, there is potential in the initiative if backed by real reform. <\/p>\n

Germany retains deep technological expertise and a powerful industrial base. <\/p>\n

The defence sector, for example, is now awash with funds and could become a driver of innovation, especially through dual-use applications. More than just capital, this would require vision, coordination and political courage. <\/p>\n

\u201cMade for Germany\u201d offers hope, but for now, little hard evidence of systemic change.<\/p>\n