German companies optimistic about possible tripartite coalition

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If Reinhold von Eben-Worlée gets his wish, Germany will soon have its very first three-party ruling coalition – and it will work.

It may be a pipe dream. But von Eben-Worlée, who heads a 170-year-old raw materials supplier, believes that Germany now has a real chance to change gears after its two main parties were locked for eight years in the “big city”. Chancellor Angela Merkel’s coalition “, which he said has failed to tackle the country’s biggest challenges.

Echoing the views of a dozen business leaders consulted by the Financial Times, Eben-Worlée expects the Greens and Liberal Democrats – widely regarded as the new political kingmakers – will put aside their differences over the debt and taxes, and will provide a platform that brings them to power alongside one of the two big parties.

“New issues are coming to the table as the grand coalition has slept,” said von Eben-Worlée, who is also chairman of Die Familienunternehmer, an association representing family businesses. He stressed that the next government will hopefully “see the economy as a partner in sustainability, not as an adversary and not as an apprentice”.

All German bosses told the FT that they were happy that the extremist left and right parties had not made further progress.

Carsten Knobel, CEO of Henkel, welcomes the strengthening of the political center after the elections © Handout

“I am happy that voters have strengthened the political center and weakened parties at each end of the political spectrum,” said Carsten Knobel, managing director of Henkel, the maker of Persil washing liquid and Loctite glue.

Some also felt relieved to see the back of the grand coalition, which joined Merkel’s center-right Christian Democrats with the Bavarian Christian Social Union and center-left Social Democrats.

However, they fear that the inconclusive election result could produce a messy and inconsistent coalition, possibly led by the SDP’s Olaf Scholz, which fails to address the issues Merkel has let slip after years of stagnant public investment. , in particular the double challenge of climate change and digitization. .

“Germany’s future economic model is at stake,” said Oliver Bäte, CEO of Allianz, calling for a “real transformation” that combines digital innovation and decarbonisation.

The recent German experience of attempted tripartite coalitions bodes ill. In 2017, many business leaders blasted FDP boss Christian Lindner for dropping coalition talks with the CDU / CSU and the Greens.

At the time, Ingo Kramer, president of the Confederation of German Employers’ Associations, called Lindner’s decision “shameful” and criticized the liberal leader for not “taking responsibility for the country”.

Today, however, CEOs are more convinced that pro-business liberals will play a more constructive role and limit the tax and spending and intervention instincts of the most left-wing elements of the Greens and Social Democrats, while by also supporting action to combat climate change. cash.

“I expect the Greens to lead the government in the right direction, while the liberals will remain focused on the free market,” said Henrik Follmann, the third generation in his family to lead his eponymous chemicals group.

Even in the industrial heart of Germany, there is strong support for a faster transition to a greener and more modern economy.

Herbert Diess, CEO of automaker Volkswagen posing in a car

Herbert Diess, CEO of automaker Volkswagen posing in an ID.3, said: “Only tangible measures will advance decarbonization” © Wolfgang Rattay / Reuters

Herbert Diess, CEO of Volkswagen, which spends 35 billion euros on the development of electric vehicles, this week called on Germany to increase its CO2 price from 25 euros per tonne to 65 euros per tonne by 2024. C is even more than the Greens manifesto. commitment for a CO2 price of 60 euros by 2023.

“Only tangible measures will advance decarbonization,” said Diess, who has long criticized Germany’s energy mix and also called for an end to fossil fuel subsidies. Diess urged lawmakers to “push forward the phase-out of coal,” currently slated for 2038.

Christian Bruch, CEO of Siemens Energy, which has a significant fossil fuel business, took a more nuanced view. Any increase in the price of CO2 must “strike a balance between what our industry can handle and what can trigger change,” he said.

“Public investment can be a trigger,” said Bruch. But companies also need “clear investment conditions.” . . invest money in areas like wind power and transmission ”.

The bosses of the Mittelstand companies, which constitute the industrial base of Germany, particularly want more investment in digital infrastructure: the country’s broadband is uneven and the public sector still communicates often by fax.

On Wednesday, chambers of commerce and industry said 61% of 3,500 companies surveyed identified digitization as a priority.

“Germany as a commercial location is gradually losing its appeal,” said Klaus Fischer, owner of the Fischer Group, a manufacturer of automotive anchors and parts near Stuttgart. “Citizens wanted changes in many areas, such as education, climate protection and even foreign policy. The CDU did not recognize it and has now received the bill for it.

The million-dollar question remains whether the stable and focused three-way coalition that German companies are hoping for will actually come to fruition, and then be able to make all of these changes. After all, the country has never had such a coalition before.

Knobel of Henkel said: “It will not be easy to compromise during the negotiation process given their divergent positions, especially when it comes to balancing the need for climate action with the guarantee of the competitiveness of German industry.

Stefan Wolf, CEO of auto parts maker ElringKlinger, went further, saying he “would have preferred to have only two parties capable of forming a coalition”. He feared “that there were risks [of political instability] and we have seen it with other countries where they have these great coalitions ”.

To date, the German political system has been “very effective in providing stability, but it is not so good in bringing about decisive action,” warned Clemens Fuest, director of the Ifo Institute in Munich, which leads a monthly benchmark survey of companies in the country.

Additional reporting by Erika Solomon in Berlin


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