Far-right election gains threaten Germany’s investment drive

{"text":[[{"start":9.35,"text":"European business leaders are warning that the rise of the German far right is raising doubts about whether Berlin can deliver economic reforms and attract much-needed foreign investment."}],[{"start":20.1,"text":"Recent state election victories by the far-right Alternative for Germany and concerns about the country’s political stability are worrying investors that Berlin will slow on promises to cut bureaucracy, make labour laws more flexible and reform the pension system, executives said. "}],[{"start":36.55,"text":"“There is enormous interest in Germany. But it is always accompanied by some scepticism about whether the government will actually deliver on its promised reforms,” Bettina Orlopp, chief executive of Commerzbank, told the FT, recounting conversations with investors at the IMF meeting in Bangkok this week."}],[{"start":54.25,"text":"“Given the recent election results, investors are asking whether the government is now in standstill or whether it will actually accelerate to get things done.”"}],[{"start":63.5,"text":"The warning comes as an unpublished report by economists including from McKinsey and Deutsche Bank highlighted the scale of the investment challenge facing Europe’s largest economy. Germany will need up to €4.1tn in investment by 2035, including up to €1tn each for energy systems and infrastructure, €700bn for defence and €600bn for AI, the report by business initiative Made for Germany seen by the FT said."}],[{"start":null,"text":"

"}],[{"start":93.1,"text":"Chancellor Friedrich Merz is preparing to welcome up to 200 investors at the inaugural “Invest in Germany” conference in Berlin this week, including Goldman Sachs chief executive David Solomon and BlackRock boss Larry Fink, who once employed Merz as the firm’s chair for Germany. "}],[{"start":111.1,"text":"The German leader is facing growing unrest within his Christian Democratic Union after electoral losses in the past two months."}],[{"start":119.3,"text":"The AfD emerged as the strongest party in state elections in Saxony-Anhalt and in Mecklenburg-Vorpommern, where the CDU for the first time failed to gain any seats in a German state election since the party was founded in 1945. Many blamed the chancellor’s unpopularity. His coalition partner Social Democrats, meanwhile, are looking for new leadership after steep electoral losses."}],[{"start":142.95,"text":"Merz told the FT in a recent interview that he would not step down and is determined to push ahead with his reform agenda, which includes investing an estimated €1tn into infrastructure and defence over the next decade as well as introducing a state fund to support Germany’s ailing pay-as-you-go pension system."}],[{"start":161.25,"text":"Thomas Buberl, chief executive of French insurer Axa, said Germany had become “the hot topic” in his recent meetings with investors, who were increasingly concerned about the country’s political stability."}],[{"start":173.95,"text":"“Will there be new elections next year? Will this government be stable? If there were new elections, will AfD come into power?” Buberl said, recounting questions raised by investors. He also delivered a stark warning that “a weak Germany will pull the whole of Europe down.”"}],[{"start":191.2,"text":"German management consultancy Roland Berger said that prospective investors at recent conferences in the Middle East wanted to know what the AfD’s election results meant for Germany’s capacity to push through reforms."}],[{"start":203.95,"text":"“My fear is that the willingness for reforms will die,” Stefan Schaible, a leader at the firm, said. “We need to speed up or face the risk that Germany is a permanent restructuring case.”"}],[{"start":216.79999999999998,"text":"Miguel López, chief executive of steelmaker Thyssenkrupp, warned that the AfD’s calls for mass deportations and a fundamental overhaul of the EU could undermine Germany’s attractiveness to international companies."}],[{"start":230.99999999999997,"text":"“Uncertainty is the most costly location factor for capital,” he said, adding that businesses depended on international skilled workers and access to the European single market."}],[{"start":241.99999999999997,"text":"Those worries didn’t stop the United Arab Emirates from pledging to invest €40bn in Germany last month to bolster industry. This follows state-owned oil company Adnoc’s €14.7bn acquisition of German chemical producer Covestro last year."}],[{"start":257.95,"text":"Overall foreign investment in Germany increased by 50 per cent to €86bn last year compared with the previous year, according to the Cologne Institute for Economic Research."}],[{"start":269.15,"text":"The 147 members of the business initiative Made for Germany, which includes industry giants such as Siemens and BMW, have pledged to invest €850bn by 2028, leaving a big gap for Berlin and foreign investors to fill to reach the up to €4.1tn investment that the country will need over the next decade in crucial areas, according to the initiative’s new report."}],[{"start":292.59999999999997,"text":"But before international investors deploy their billions, they want to see if Germany can tackle its longstanding structural weaknesses, including sprawling bureaucracy and high energy costs."}],[{"start":303.95,"text":"“The question is no longer whether Germany needs reform,” added Stefan Hoops, chief of Deutsche’s asset manager DWS. “The question is whether Germany can implement reforms at the speed required.”"}],[{"start":324.45,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1792372979_9337.mp3"}