The Federal Government is doing all it can to ensure that Germany remains an attractive business location that can impress with its innovative power on a global stage. Many of the industrial goods produced in Germany are from the area of cutting-edge technology, such as engineering, the semiconductor industry and IT technology. German industry has demonstrated its ability to develop climate-protection solutions for use around the world, while reducing its own greenhouse gas emissions at the same time.
Investments are being made in the latest technologies in Germany
The great number of investment decisions for semiconductor production in Germany give us good reason to be optimistic regarding Germany as a business hub, said the Federal Chancellor on 8 August 2023 in reference to the Taiwanese semiconductor manufacturer TSMC’s choice of Dresden as a production location. The Federal Chancellor believes this decision is part of a broader trend that also includes investments made by automobile manufacturers in the field of electromobility and battery production, as well as recent investments in modern CO2-free steel plants in Germany.
The goal is for Germany to achieve CO2-neutrality by 2045, while remaining one of the world’s most successful industrial countries. “Germany is a good business location where investments are made in state-of-the art technology,” said Federal Chancellor Olaf Scholz.
Greater speed, more innovations and skilled workers
The Federal Government supports German industry and strengthens the country's business appeal with a wide range of specific measures:
- Rapid planning and approval procedures for Germany: The rapid construction of the first liquid gas terminals in Wilhelmshaven, Lubmin and Brunsbüttel showed that quick procedures are possible. This is the new speed in completing planning and approval procedures in Germany that the Federal Government and the Länder have already implemented through various legislative changes and that will be expanded through further acceleration packages.
- Renewable and affordable energy: The Federal Government is making huge investments to speed up the development of renewable energy. Almost half of the electricity used is already generated by means of renewable energy sources, and planning provides for this to go up to 80 percent by 2030. The development of transmission grids will lead to lower electricity costs for everyone, because electricity generation from renewable energy sources is very cheap even now. In addition, the Federal Government wants to massively promote the transport and use of hydrogen by updating the National Hydrogen Strategy.
- More skilled workers: The Skilled Workers Immigration Act seeks to make Germany more attractive to skilled workers. It is designed to significantly simplify immigration for people from outside the EU and to safeguard prosperity for everyone in Germany as a result. Furthermore, the Federal Government has introduced a training guarantee for everyone and is providing support for companies that choose to invest in training and professional development.
- Promoting innovation: Three examples from this area: The European Chips Act and the EU Commission’s goal to bring 20 percent of global semiconductor production to Europe by 2030 are set to further strengthen competitiveness and structural change in Germany and Europe in this field.
With its national AI Strategy, the Federal Government wants to make Germany a leading location for development and application of AI technology and to ensure its global competitiveness. A total of 3.5 billion euros is earmarked to be used for this purpose by 2025. In addition, the Federal Government plans to provide more support for start-ups and to develop the Start-up Strategy further. One of the goals here is for start-ups to receive support and funding more quickly and unbureaucratically.
- Diversification and resilience: The Federal Government helps companies to establish new, diversified supply chains in order to avoid risky dependency on individual countries. To this end, raw material partnerships have been formed with Chile and Azerbaijan, for example, and others are to follow. Furthermore, the development of renewable energy and liquid gas infrastructure is making Germany less dependent on individual suppliers in the area of energy production.
- Shaping the transformation together: In order to achieve the goals listed above, the Federal Government cooperates closely with business associations, employees, the academic sector and civil society. Together with its partners in the Alliance for Transformation – a Federal Government dialogue format established under the coalition agreement – it wants to reinforce cohesion to allow for a successful transformation towards a climate-neutral Germany.
Germany – an attractive business hub
A number of large-scale investment decisions in key industries shows that Germany has potential for growth and is still an attractive location for companies:
- In the area of semiconductor production considerable investment decisions were announced by companies including Wolfspeed in the Saarland, Infineon in Dresden, Intel in Magdeburg and TSMC in Dresden. Federal Chancellor Scholz said that “Germany is likely to become the number one location for semiconductor production in Europe”.
- Production facilities for electromobility and battery factories are being created across Germany, such as in Salzgitter by VW, in Schwarzheide by BASF, in Grünheide by Tesla and by ZF Friedrichshafen AG.
- Investments in Germany are also underway in the fields of mechanical engineering and heavy industry, for example by Siemens AG in Erlangen and by thyssenkrupp in the production of green steel using hydrogen in Duisburg. The Federal Government is providing funding for this project, too.
- Recent evidence of the development of renewable energy sources picking up speed and becoming more attractive for companies include the recent successful auction of four sites for offshore wind farms in the North and Baltic Sea. These changed hands for a total of EUR 12.6 billion, 90 percent of which is to be used to reduce electricity costs – a clear sign that wind energy is an essential part of the energy transition.
How does the Federal Government fund important investments for the future?
The federal budget provides for some key investments in the country’s future to be made over the next few years, especially in the areas of digitalisation, mobility, education and research. More than 54 billion euros are available for this in 2024 alone.
Through its Climate and Transformation Fund (CTF) the Federal Government wants to provide another around 57.6 billion euros for investments into the future. Planning provides for a total of 211.8 billion euros to be made available through the CTF between 2024 and 2027.