Economic policy: Scholz wants to strengthen industry – but Chancellor without a majority

Chancellor Olaf Scholz (SPD) is aiming for immediate measures by the end of the year to strengthen the German economy. “We need new impulses in the short term so that things can get better again,” said Scholz, according to a statement from the federal government after another industrial summit in the Chancellery in Berlin.

“We should use the next few weeks to adopt measures that companies and employees are urgently waiting for.” Scholz met with representatives of industrial associations, unions and large companies.

However, after the failure of the traffic light coalition for possible billion-dollar projects, the Chancellor no longer has a majority in the Bundestag. It is therefore completely unclear whether the plans proposed by Scholz will be implemented by the new elections in February. Strengthening the industrial location and securing industrial jobs – that could be the SPD’s main message in the election campaign.

Scholz suggests concrete measures

After the first industry summit at the end of October – when the traffic light coalition made up of the SPD, Greens and FDP still existed – Scholz called for a “pact for industry” to be forged together. There is no longer any talk of such a “pact” after the renewed meeting, nor of a continuation of the talks. This was originally planned.

However, Scholz named specific measures that he advocates. This includes a rapid stabilization of network fees this year, as it was said. This would relieve companies of electricity costs.

There was no information on the specific amount of relief and financing. Economics Minister Robert Habeck (Greens) – who was again not at the industrial summit – had suggested using the billions in funding released by the postponement of the Intel chip factory in Magdeburg to reduce network fees.

After the industry summit, the federal government further announced that the government wanted to develop a concept for a permanent cap on network fees and for targeted relief.

Relief for the auto industry

Scholz also wants to lobby the EU Commission to avoid fines for car manufacturers who exceed so-called car fleet limits on CO2 emissions. The threat of high fines in 2025 would lead to significant economic damage to companies, it was said. According to the federal government, other topics at the industrial summit included reducing bureaucracy and reducing reporting requirements.

Scholz sees industry as having a duty

The President of the Federation of German Industries, Siegfried Russwurm, said after the meeting: “We have highlighted a few points on which we still see opportunities for action in the remaining months until the election.” Russwurm sees Scholz as having a duty. He said it was now up to the federal government to explore political majorities for the projects that were important to it.

Business associations and companies have long complained about electricity prices that are high compared to international standards. In particular, network fees as part of the electricity price are rising; one cost driver is the expansion of the electricity network. This is at the expense of competitiveness and slows down investments.

After the industrial summit, industry circles said that some priority measures were now being discussed. This includes a reduction in the sharply increased network fees in order to have internationally competitive electricity costs. A federal subsidy of 5.5 billion euros was provided in 2023 to stabilize transmission network fees. For reasons of savings following a budget ruling by the Federal Constitutional Court, the government canceled the support.

With the subsidy, the transmission network fees would have been an average of 3.12 cents per kilowatt hour, according to industry circles – after the subsidy was eliminated, they would be an average of 6.43 cents per kilowatt hour in 2024.

Better depreciation options are also proposed in order to provide investment incentives, as well as an expansion of the research allowance. The possibility of storing CO2 underground is also mentioned in industrial circles. The supply chain law should be suspended until EU regulations are implemented nationally.

Union warns of impasse

The chairman of the industrial union IGBCE, Michael Vassiliadis, said: “We made it clear today that the problems in the energy-intensive sectors and German industry as a whole cannot be postponed.” Germany cannot afford a months-long deadlock through the election campaign and the formation of a government. What is needed immediately is relief for electricity, the largest cost driver.

The first chairwoman of the IG Metall union, Christiane Benner, warned of the loss of jobs before the Scholz summit: “Action must be taken now.”