Germany’s coalition partners, the CDU/CSU and SPD, agreed on a series of economic measures during their coalition committee meeting on Thursday evening, including a state-subsidized industrial electricity price, a reduction of the aviation tax, and the creation of a “Germany Fund” to boost investment in startups.
Chancellor Friedrich Merz (CDU) said the goal is to strengthen the competitiveness of German companies and secure jobs. Business associations welcomed the decisions but called for additional steps.
“A strong Germany needs a strong economy and secure, well-paid jobs,” Merz emphasized. Energy costs, he said, are a key factor. For the years 2026 to 2028, an industrial electricity price is planned for energy-intensive companies, with a target rate of five cents per kilowatt-hour. Vice Chancellor and Finance Minister Lars Klingbeil estimated the cost to the state at three to five billion euros.
The expansion of renewable energy will also be backed by the construction of new gas-fired power plants. This, Merz said, will ensure “that Germany’s electricity demand is met even when wind and solar are not available.” The coalition agreed that next year, tenders will be issued for gas-fired plants with a total capacity of eight gigawatts, which are to be operational by 2031.
“We have done our homework,” said SPD co-chair and Labour Minister Bärbel Bas at a joint press conference with coalition leaders. She noted “great uncertainty,” especially regarding industrial jobs in sectors such as steel and automotive manufacturing. Lowering energy costs, she said, is therefore essential.
Klingbeil said he was “very satisfied” with the agreements and announced that he and Economics Minister Katherina Reiche (CDU) would present details on the Germany Fund in the coming days. As an example, the SPD co-chair mentioned support for startups in the security sector. According to the coalition agreement, the state is expected to provide ten billion euros, enabling significantly larger investments through private capital. No financial amounts were mentioned on Thursday.
The coalition is pursuing an “economy first” approach, said CSU leader Markus Söder. Energy prices have been “a real competitive disadvantage for Germany,” he said, including in comparison with other European countries. The new decisions, he argued, will now improve the competitiveness of the German economy.
The CDU/CSU and SPD also agreed to reverse the recent increase in the aviation tax. Merz said this would provide relief of 350 million euros. Söder called the agreement “a clear signal that flying in Germany is competitive.”
The German Chemical Industry Association (VCI) welcomed the industrial electricity price but urged further measures. The price is “a useful building block but does not replace a genuine strategy to strengthen Germany as a business location,” said VCI CEO Wolfgang Große Entrup. “We now need relief across the board, in energy, taxes, and bureaucracy.”
The IG Metall union also expressed approval but told the Funke Media Group newspapers that the industrial electricity price is “not a singular cure-all and must be complemented with further smart industrial policy.”
The Federal Association of the German Aviation Industry (BDL) welcomed the reversal of the aviation tax increase as an “important signal.” The federal government, said managing director Joachim Lang, is stopping “the years-long upward spiral of taxes and fees for air traffic from Germany.” However, further steps are still needed. Michael Engel, managing director of the Federal Association of German Airlines, called it a “good signal for the aviation sector in Germany.”
After the press conference, coalition leaders continued their discussions. When asked whether he expected an agreement on the dispute over allowing new combustion-engine vehicles after 2035 and on the pension package, Merz replied: “Twice yes.” However, after the talks ended shortly before 11 p.m., no further announcements were made. Two more coalition committee meetings are planned before Christmas.
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