The Federal Government has set out to modernise this country and make it fit for the future. Germany should remain a strong country. To accomplish this, it must regain its competitiveness and foster economic growth. Without a thriving economy, we cannot maintain our prosperity. It is also essential for funding public services such as infrastructure, education and security.

The labour market and competitiveness – we are strengthening our economy  

Greater growth and improved competitiveness: the Federal Government is creating a framework that encourages entrepreneurs to invest in Germany and safeguard jobs. A number of measures have already been adopted in the first year of this Federal Government’s term of office, ranging from the Immediate Tax Investment Programme to the High-Tech Agenda. 

In addition, the Federal Government has set up a Special Fund for Infrastructure and Climate Neutrality amounting to 500 billion euros. On top of this, there is also the Germany Fund, worth 30 billion euros, which is designed to mobilise private and local authority investment. Further measures will follow. For example, the governing coalition has agreed to allow so-called unjustified fixed-term employment contracts to be entered into for a longer period than was previously the case. The aim is to make the labour market more dynamic.

Social security systems – we are stabilising the statutory health insurance and pension schemes

The Federal Government intends to ensure that contributions to social security systems – unlike in previous years – do not rise any further. This approach benefits employees just as much as it does companies.

The Statutory Health Insurance Act lays the foundations for keeping statutory health insurance contributions stable whilst reliably ensuring a high standard of medical care.

The statutory pension scheme must also be overhauled in order to keep contributions stable despite demographic change, and to increase pension levels in the long term. That is why the governing coalition has agreed to implement the Pension Commission’s recommendations in full. The aim is to draw up a draft bill to this effect in the near future and have it passed by Parliament by the end of 2026. Prior to this, the Federal Government had already stabilised pensions and strengthened private and occupational pension schemes through the Pension Package 2025.

Cutting red tape and modernising the state – we are modernising Germany and making everyday life easier  

With the 2025 Federal Modernisation Agenda (Modernisierungsagenda Bund), the Federal Government has already set out a roadmap for the entire legislative term, with the aim of making the state more effective, more efficient and more responsive to the needs of its citizens. The Federal Modernisation Agenda (Föderale Modernisierungsagenda), drawn up by the Federal Government and state governments, also serves this objective. 

In the last few months alone, over 40 measures to cut red tape have been implemented. They reduce the burden on the economy and on the public by a good ten billion euros a year. Further measures will follow. Companies are relieved of unnecessary reporting and documentation requirements, and approval procedures are streamlined and made faster. Citizens are increasingly able to complete administrative processes online.

Tax policy – we are providing relief for people with low and middle incomes

As agreed in the coalition agreement, the Federal Government intends to ease the tax burden on those on low and middle incomes. Families should also benefit. To this end, the Federal Government will draw up a tax reform package, which is due to take effect on 1 January 2027. Plans are in place to increase the basic allowance, the child allowance, child benefit and the employee’s flat-rate allowance.

Relief measures are already in place, for example for commuters who rely on their cars to get to work. This is because the Federal Government has permanently increased the commuter allowance.