Tegernsey, Germany – Last week, a small German business leader, economists and politicians located next to the iconic Lake Tegernsey descended into the small, picturesque town of Bavaria to share their hopes and discuss the dangers they are at stake for the new government.
Bolstered by recent positive market sentiment for Europe’s biggest economy, participants at the summit were joined by their call to intervene and honor the campaign’s promises. Failure is likely not tolerated, and some business leaders have warned that the government cannot tolerate a “lazy summer.”
Despite the rain and drooping clouds providing a somewhat boring backdrop for an event called “Davos of Germany,” promises of a new beginning engulfed the summit, and the atmosphere was bustling with excitement at the potential change.
View of Tegernsy from Ludwig Elhard Summit
Sophie Kiderlin, CNBC
High expectations for the government are commonplace, and it appears that Germany’s struggling economy and recent political turmoil have disappeared into the background.
Germany’s DAX index has now grown by more than 18% since the beginning of the year, reaching record highs frequently in recent months. However, the German economy has been in a stagnant territory for over two years, and the tensions over economic, fiscal and budget policies in the previous ruling coalition have continued to weigh expectations.
Patrick Trutwein, chief risk officer and chief operating officer of IKB Deutsche IndustrieBank AG, said on a panel hosted by CNBC’s Annette Weisbach.
He says he feels positive about Germany’s future, taking into account the announcement of major financial packages set out in Germany’s constitution, and furthermore potential reforms and an “economy that is fairly robust and can build productivity and capacity in itself.”
Matthias Voelkel, CEO of Boerse Stuttgart Group, was among those who felt hope.
“If we look ahead and they (the new government) do the right thing, I’m optimistic,” he told CNBC.
Meanwhile, Audi CEO Gernot Döllner said in a chat by the fireplace that he hopes the new government will “send impulses to the German economy.”
The mood has also brightened up in the German automotive sector. It has long struggled with competition with China, suffered from pressure from the transition to electric vehicles, and has recently been hit by US tariffs.
“The Germans are back,” Hildegard Mueller, chairman of the German Association of the Automotive Industry, said on Friday of CNBC Weissbach. “We’re competitive,” she added.
Lecture at the Ludwig Erhard summit.
Sophie Kiderlin, CNBC
However, in positive talk, it was clear that observers pay attention to the government with every move.
“This new government in Germany cannot allow for a politically lazy summer. Sorry, they have to work, they have to work hard,” said Zu Guttenberg, chairman of Spittsburgh partners and former German politician Karl Theodor.
Or, Veronika Grimm, a member of the German Council of Economic Experts, told CNBC:
The message was clear. Germany needs to put that action together.
Alexander Horn, general manager Eli LilyThe German arm – Lily Germany – said the business strongly welcomes the new government’s goals but does not tolerate the warning.
“Specifically, we expect the declaration of intents in the Union contract to be implemented quickly. Speed plays a huge role,” he said during the panel, according to a CNBC translation.
Voelkel of Boerse Stuttgart Group showed that his optimism depends on actions from the government, and said he was looking for a move towards “decreasing bureaucracy, regulating anti-growth, innovation, and intensifying investment in particular.”
The newly created German government has pledged to set many of these points as policy goals, boost the country’s economy, reduce bureaucracy, and boost innovation and investment during election campaigns and in coalition agreements.
“This country needs an economic change. After two years of recession, the previous government had to announce again (a) 2025 zero growth year and we really need to work on this.”
