German Economy Suffocating Under Bureaucracy as New Minister Promises Change

Germany’s new Minister for Economic Affairs, Katherina Reiche (CDU), has introduced a wide-ranging plan to revive the country’s faltering economy. Speaking at the Ludwig Erhard Summit, Reiche presented a four-point agenda that focuses on lowering energy prices, reducing bureaucratic complexity, strengthening international trade ties, and reinforcing Germany’s role in Europe.

Her proposals come at a time of growing frustration among business owners, especially small and medium-sized enterprises, who say that navigating Germany’s economic landscape has become increasingly difficult due to a mix of regulatory burdens, high energy costs, and an uncertain investment climate. Reiche acknowledged that the current economic stagnation has deep structural causes—and that these problems must be addressed with urgency.

A Country in Economic Distress

Germany is currently in its third consecutive year of recession. Key indicators such as business investment, employment figures, and company insolvencies reflect a worrying trend. Reiche described the situation as a “historic growth crisis,” noting that the slowdown began before the current coalition took office and has only deepened since.

She emphasized that the roots of the crisis are domestic. “If the crisis is made in Germany, then the solution must also be made in Germany,” she said. This message served as a guiding theme throughout her presentation.

Cutting Through Administrative Hurdles

Among the core elements of her reform strategy is the goal of reducing bureaucratic complexity for businesses. Reiche noted that many companies spend significant time and resources fulfilling administrative requirements, which discourages innovation and slows growth.

Although previous governments have pledged to reduce bureaucracy, results have been limited. Reiche said the new coalition is now assigning dedicated teams within ministries to focus solely on regulatory simplification. She stressed that future policy must be developed with implementation in mind—streamlining rules and allowing companies more flexibility to test ideas and adapt quickly.

“We should not regulate everything from the start. We need to give room for initiative,” she said. The coalition aims to reduce the bureaucratic burden by at least 25 percent—a target Reiche admitted is ambitious, but necessary.

Repositioning Energy Policy

Energy costs remain one of the most pressing challenges for businesses, especially for industry. Reiche announced plans to fast-track the construction of flexible gas-fired power plants that can later be adapted to use hydrogen. She also called for lower electricity taxes and a special industrial electricity rate, while remaining realistic about the challenges of securing approval for such measures at the European level.

She emphasized that security of supply must take priority and warned against overly optimistic assumptions about the pace of the energy transition. “Without stable and affordable energy, neither competitiveness nor climate goals can be achieved,” she said.

A Focus on International Partnerships

On foreign trade, Reiche highlighted the importance of expanding partnerships beyond traditional markets. She named Australia, Chile, and India as potential future partners for free trade agreements, while underscoring the need to maintain strong economic ties with the United States. Germany and the EU are currently working to avoid a new trade conflict with Washington.

Reiche also stressed that international cooperation will be critical to strengthening Europe’s economic standing. She pointed to the importance of working closely with France, Poland, and the UK to reinforce the continent’s competitiveness.

A Shift in Tone and Direction

Reiche’s style marks a clear departure from her predecessor, Robert Habeck (Greens), who was widely credited for his crisis management during the early stages of the Ukraine war but criticized later for indecision and an overreliance on regulation. Reiche, a former executive at the energy company E.ON, is known for her structured, data-driven approach. Her address to the summit audience was factual and pragmatic, avoiding political showmanship.

Inside the ministry, change has come quickly. Many of Habeck’s senior staff have already been replaced, including three of four state secretaries. Some entire departments—such as climate and digital affairs—are being restructured or moved to other ministries. Reiche has made it clear she intends to shift the focus of the ministry toward enabling economic activity rather than managing it from the top down.

Cautious Optimism Among Business Leaders

Business leaders and trade associations have cautiously welcomed Reiche’s proposals, though many are waiting to see how the reforms will be implemented. There is broad agreement that Germany’s economic system needs modernization, and that simpler rules and faster decision-making would help restore investor confidence.

Whether Reiche can deliver on her promises remains to be seen. But her early statements reflect an understanding of the daily challenges facing entrepreneurs and established firms alike. If she succeeds in reducing complexity, improving energy affordability, and fostering innovation, it could mark a significant shift in German economic policy.