In total, the black-red Federal Government passed 175 laws and measures in the first twelve months (as of 27 April 2026) and set an important course, particularly in the areas of the economy, security, migration and social cohesion. The focus is on investments in defence, roads, schools, digitalisation, security authorities and modern administration.

The aim is to make Germany competitive again and thus put it on a strong economic footing. In addition to reforms to the healthcare and social systems, processes are also being accelerated, and infrastructure is being modernised.

Economic growth – strengthening competitiveness 

Germany should remain a strong industrialised nation and a country of small and medium-sized businesses. At the same time, it must continue to expand its innovative strength. The Federal Government’s most important measures include the immediate investment programme, a new Germany Fund, the Business Location Promotion Act, the High-Tech Agenda and reductions in energy costs.

The immediate tax investment programme came into force on 19 July 2025. It serves to provide a rapid boost to growth-generating investments – combined with long-term relief. Specifically, the Federal Government is creating declining balance depreciation of up to 30 percent for investments in equipment after 30 June 2025 and before 1 January 2028. With the first reduction in corporation tax in more than 15 years, the Federal Government is easing the burden on companies in order to incentivise investment.

The Federal Government is eliminating the investment backlog. The 500 billion euro Special Fund for Infrastructure and Climate Neutrality has now been launched. Anything that is to be built and has been planned can now be built. The government is using this fund to renovate schools, bridges, roads and railways, for example. In the short time through the end of 2025, the Federal Government was already able to invest 24 billion euros from the special fund. In total, Federal investment amounted to 87 billion euros last year – an increase of 17 percent compared to 2024. For 2026, the Federal Government is planning a further increase in investment to over 120 billion euros. At the same time, the state is becoming more efficient and closer to its citizens. For example, the child benefit is paid out from birth without the need for an application and the driving licence is digital.

Relieving the burden on businesses and consumers

The Federal Government is reducing energy costs noticeably and permanently. This should both strengthen the international competitiveness of Germany as a location for business and reduce the burden on consumers. Since the beginning of 2026, measures have been in force that will mean around ten billion euros a year in energy cost savings for all consumers. The measures include the abolition of the gas storage levy, lower grid fees and a reduction in electricity tax for manufacturing companies and the agricultural and forestry sectors.

In response to the situation in the Middle East, the Federal Government is temporarily reducing the mineral oil tax by around 17 cents per litre for petrol and diesel for two months – with the Emergency Energy Programme. This will save citizens and companies around 1.6 billion euros at the petrol station. In addition, antitrust law was tightened with the Motor Fuel Measures Act.

Security and defence

The security situation in Europe and the world has prompted Germany to realign its defence in a new and more comprehensive way. Investments in the Bundeswehr, civil defence, civil protection and security authorities strengthen Germany. Crime, extremism and organised networks are also being pursued more resolutely.

The Federal Police Act was reformed and drone defence improved. With the KRITIS umbrella law, uniform minimum standards for the protection of critical infrastructures have been defined for the first time. The Federal Government is also implementing new European cyber security standards and has adopted a national economic protection strategy. The National Security Council was established under the chairmanship of the Federal Chancellor. Germany’s security architecture was thus rebuilt at a crucial point in order to strengthen the Federal Government’s ability to act in matters of national security.

German defence spending is increasing significantly. The reform of the planning and procurement system will contribute to the efficient use of additional funds. A new military service model is intended to make the Bundeswehr more attractive and is initially based on voluntary service. Germany is strengthening European defence capabilities within NATO.

New emphasis on foreign and European policy 

The Federal Government’s foreign and security policy is also systematically building new partnerships in order to adapt to a world of great powers. This follows the realisation that European and transatlantic cooperation alone will not be enough to effectively protect the country’s own interests in the new order. The Federal Chancellor has made this a priority, among other things by travelling to and holding talks with his counterparts from India, Turkey, Brazil, South Africa and the Gulf states. This has provided new impetus for strategic cooperation.

Since taking office, Federal Chancellor Friedrich Merz has pursued a European policy aimed at strengthening European security‑ and defence capabilities, closer German-‑French cooperation, the economic competitiveness of the EU and a more capable, sovereign Union. The focus is on the need for economic reforms and continued support for Ukraine. For the Federal Government, Europe is and remains the central framework for Germany’s foreign‑ and security policy activities.

Organising migration

The Federal Government has initiated a turnaround in migration: processes run faster, rules are applied more consistently. For the first time since 2015, Germany is no longer the country with the highest number of asylum seekers in Europe; it lies in fourth place behind France, Spain and Italy. Among other things, consistent rejections at the borders, the abolition of naturalisation after three years and family reunification for persons entitled to subsidiary protection have contributed to this.

At the European level, the Common European Asylum System was reformed. From June 2026, more standardised rules will apply for greater order, safety and fairness. For Germany, this means faster processes and a noticeable reduction in the workload.

Promoting social cohesion

Due to demographic trends and the increasing burden on social security systems, the Federal Government must secure the welfare state for the long term. Several commissions – such as the Commission on Welfare State Reform and the Healthcare Finance Commission – have drawn up proposals that are now being implemented step by step. 

Health

Based on the recommendations of the Healthcare Finance Commission, the Federal Government has introduced a draft law to stabilise contribution rates. The goal: stabilise contribution rates in the long term and at the same time continue to ensure a high level of healthcare. To this end, a package of measures was adopted to distribute the burden. Everyone must contribute – doctors, hospitals, pharmacies, manufacturers, insured persons and employers.

Pension, basic income support and minimum wage

The pension level was stabilised at 48 percent through 2031 and preparations were made for the introduction of the Mothers' Pension III on 1 January 2027. New supplementary income opportunities have been created with the active pension. The company pension provision scheme was also strengthened. The Federal Government has also initiated a reform of private pension provision and created important incentives to make financial provision for old age from an early age with the Early Start Pension. The Citizen’s Income has been replaced by the new basic income support with the aim of making social benefits fairer and more accurate. The statutory minimum wage has been €13.90 (gross) per hour since 1 January 2026. More than six million people will benefit from the increase.

Creating more educational equality

Rising rents and a shortage of living space are a burden for many people. The housing construction turbo initiative accelerates planning and approval processes and creates additional living space; in addition, the rent freeze has been extended. Another focus is on education and family. The investment programme for the expansion of all-day care will give the federal states and local authorities the time they need to make sensible use of federal investment funds and expand high-quality childcare services. The DigitalPakt 2.0 is expanding the digital infrastructure in schools and providing for reliable administration.