Germany needs a fresh start. The upcoming federal elections could provide the necessary impetus. But is the pain already big enough?
Germany faces significant challenges. Although the economy has recovered from the effects of the Covid-19 pandemic, the energy crisis and the war in Ukraine have exposed weaknesses. Dependence on fossil fuels is affecting competitiveness. Economic growth has stalled, and industrial production is declining in key sectors such as the automotive and chemical industries.
At the same time, the digital transformation is posing structural adjustment problems for the economy. Germany, a pioneer in engineering, is falling behind in key technologies such as artificial intelligence. Geopolitical tensions are adding to the pressure: The competition between the U.S. and China, the war in Ukraine and the global reorganisation of trade relations call for a strategic reorientation.
A major obstacle to progress and renewal in Germany is bureaucracy. Lengthy approval procedures, over-regulation and a lack of coordination between federal, state and local authorities often hinder the implementation of projects and ideas. These hurdles not only slow down economic development, but also hamper much-needed progress in areas such as digitalisation, infrastructure and renewable energy. Therefore, consistent reduction of bureaucracy and the expansion of digital administrative processes are essential to ensure Germany's long-term competitiveness.
The country also faces domestic challenges: rising inflation, social inequality, migration, political missteps and the climate issues are polarising society. Many citizens are frustrated by political stagnation and are calling for bold reforms.
It is more than twenty years since Gerhard Schröder announced the Agenda 2010 in a government statement. At the time, Germany was facing one of the worst economic crises in its post-war history. Unemployment was alarmingly high and economic growth was stagnating. Added to this, high social contributions were burdening companies and undermining the competitiveness of the German economy. The British magazine The Economist described Germany as ‘the sick man of Europe’ – a bitter characterisation for a nation once regarded as the economic engine of Europe.
In the midst of this crisis, Gerhard Schröder’s government embarked on a historic reform: the Agenda 2010. Measures such as the easing of employment protection legislation, the introduction of Hartz IV and the deregulation of the labour market were designed to boost employment and enhance economic competitiveness. The reforms were controversial, but they laid the foundations for the subsequent economic upswing that helped Germany regain its strength and competitiveness.
Elections 2025: Germany’s chance for a turning point
Just as twenty years ago, Germany finds itself in a period of uncertainty and disorientation that urgently requires decisive political action. The crisis then was largely self-inflicted, while today’s challenges are also deeply rooted in Germany’s global interdependence and thus far more complex. Yet, there is a crucial parallel: the need for profound reforms to secure the country’s competitiveness.
The upcoming elections offer an opportunity to reorient the country and tackle the reform backlog. A new government could drive the necessary changes in the areas of digitalisation, migration, bureaucracy and energy. Above all, this will require clear goals, bold decisions and targeted economic policies. This will enable Germany not only to regain its position as Europe’s economic powerhouse, but also strengthen its global presence. Germany must once again prove that it is capable of meeting the challenges of the times. With a proactive policy that prioritises innovation, performance and global competitiveness, the ‘sick man of Europe’ can become an anecdote of the past again. Common goals and a reform-minded government could turn Germany into a role model of renewal in Europe – a pioneer for the economy, the climate and social cohesion.
Positive outlook for German equities
German’s small and medium-sized enterprises (SMEs) in particular stand to benefit from new economic policy stimuli. Not only could companies regain confidence, but they could also show a greater willingness to invest. The prerequisites for this are a stable political framework and new impetus for growth. Many of these SMEs have been overlooked by investors in the past, which leaves them with considerable potential to catch up. The low valuations of these stocks make their price prospects particularly attractive.
Legal notices
This is a marketing communication.
This marketing communication is for information purposes only and provides the addressee with guidance on our products, concepts and ideas. This does not form the basis for any purchase, sale, hedging, transfer or mortgaging of assets. None of the information contained herein constitutes an offer to buy or sell any financial instrument nor is it based on a consideration of the personal circumstances of the addressee. It is also not the result of an objective or independent analysis. MainFirst makes no express or implied warranty or representation as to the accuracy, completeness, suitability, or marketability of any information provided to the addressee in webinars, podcasts or newsletters. The addressee acknowledges that our products and concepts may be intended for different categories of investors. The criteria are based exclusively on the currently valid sales prospectus. This marketing communication is not intended for a specific group of addressees. Each addressee must therefore inform themselves individually and under their own responsibility about the relevant provisions of the currently valid sales documents, on the basis of which the purchase of shares is exclusively based. Neither the content provided nor our marketing communications constitute binding promises or guarantees of future results. No advisory relationship is established either by reading or listening to the content. All contents are for information purposes only and cannot replace professional and individual investment advice. The addressee has requested the newsletter, has registered for a webinar or podcast, or uses other digital marketing media on their own initiative and at their own risk. The addressee and participant accept that digital marketing formats are technically produced and made available to the participant by an external information provider that has no relationship with MainFirst. Access to and participation in digital marketing formats takes place via internet-based infrastructures. MainFirst accepts no liability for any interruptions, cancellations, disruptions, suspensions, non-fulfilment, or delays related to the provision of the digital marketing formats. The participant acknowledges and accepts that when participating in digital marketing formats, personal data can be viewed, recorded, and transmitted by the information provider. MainFirst is not liable for any breaches of data protection obligations by the information provider. Digital marketing formats may only be accessed and visited in countries in which their distribution and access is permitted by law.
For detailed information on the opportunities and risks associated with our products, please refer to the current sales prospectus. The statutory sales documents (sales prospectus, key information documents (PRIIPs-KIDs), semi-annual and annual reports), which provide detailed information on the purchase of units and the associated risks, form the sole authoritative and binding basis for the purchase of units. The aforementioned sales documents in German (as well as in unofficial translations in other languages) can be found at www.mainfirst.com and are available free of charge from the investment company ETHENEA Independent Investors S.A. and the custodian bank, as well as from the respective national paying or information agents and from the representative in Switzerland. These are:
Austria, Belgium, Germany, Liechtenstein, Luxembourg: DZ PRIVATBANK S.A., 4, rue Thomas Edison, L-1445 Strassen, Luxembourg; France: Société Générale Securities Services, Société anonyme, 29 boulevard Haussmann, 75009 Paris; Italy: Allfunds Bank Milan, Via Bocchetto, 6, 20123 Milano; SGSS S.p.A., Via Benigno Crespi 19A-MAC2, 20159 Milano; Spain: Société Générale Securities Services Sucursal en Espana, Plaza Pablo Ruiz Picasso, 1, 28020 Madrid; Switzerland: Representative: IPConcept (Schweiz) AG, Münsterhof 12, CH-8022 Zürich; Paying Agent: DZ PRIVATBANK (Schweiz) AG, Münsterhof 12, CH-8022 Zürich.
The investment company may terminate existing distribution agreements with third parties or withdraw distribution licences for strategic or statutory reasons, subject to compliance with any deadlines. Investors can obtain information about their rights from the website www.ethenea.com and from the sales prospectus. The information is available in both German and English, as well as in other languages in individual cases. Explicit reference is made to the detailed risk descriptions in the sales prospectus.
This publication is subject to copyright, trademark and intellectual property rights. Any reproduction, distribution, provision for downloading or online accessibility, inclusion in other websites, or publication in whole or in part, in modified or unmodified form, is only permitted with the prior written consent of MainFirst.
Copyright © 2024 MainFirst Group (consisting of companies belonging to MainFirst Holding AG, herein „MainFirst“). All rights reserved.
