The introduction of the euro 25 years ago marked the beginning of a new era for economic and political integration in Europe, underlining the importance of the European economic area. The stability of the single currency is closely tied to the fiscal and financial policies of its member states. Without targeted and binding budget and debt rules, a sound fiscal policy in the eurozone is unattainable. In 2024, the EU revised its existing fiscal surveillance regulations ("Economic Governance"). The aim is for member states to comply with the Stability and Growth Pact, leveraging the adapted guidelines from 2025. The convergence criteria of a maximum public debt of 60 percent of GDP and a maximum annual financing deficit of 3 percent of GDP are upheld. The revised framework combines greater flexibility with stricter enforcement of bilateral agreements set between the EU Commission and the respective member state, requiring mandatory compliance.

Excessive, non-compliant debt levels by any EU member state should be effectively sanctioned. If bilateral agreements are not maintained, deficit proceedings must be initiated as a matter of obligation, and financial penalties should be imposed in cases of persistent non-compliance with regulations.

Companies rely on long-term stable framework conditions to invest in the growth and development of their locations, drive innovations, and create jobs. This requires securing the markets' credibility in the Euro through a sustainable financial policy. A core element of such a policy is fiscal rules. In their various forms, they ensure budget discipline by setting limits on government spending and debt financing (or deficits). In Germany, the debt brake means that public expenditures must generally be financed with current available revenues. The debt brake, enshrined in the Basic Law since 2009, ensures credibility and trust in financial policy and thereby enables functioning markets that are indispensable for companies.

The debt brake limits the new borrowing of the federal and state governments and contributes to keeping government debt at a sustainable level in the long term, ultimately limiting the tax burden on companies. The debt brake has successfully met challenges for the state, economy, and society. In times when it was necessary, it allowed stronger financial engagement by the state to secure the economy. Any potential reform of the debt brake should not question its stabilizing effect, as companies rely on reliable economic policy framework conditions. Instead, the aim is to strengthen its flexibility to enable an appropriate fiscal response in times of crisis.

A forward-looking economic policy requires, in addition to stable public finances, a sustainable growth strategy that primarily triggers investments in infrastructure, education, and research. Until the end of the last decade, progress in consolidating public finances was mainly based on high, growth-driven tax revenues and the returns of a long period of low-interest rates. 

Although public investments have already been increased, greater emphasis should be placed on these expenditures within public budgets to sustainably improve economic conditions. It is important that the implementation of public investment projects on all governmental levels be carried out much faster and with less bureaucracy. 

Rising interest and debt repayment burdens on public budgets significantly reduce investment opportunities, thereby hindering improvements to economic location conditions for businesses. The prioritization of public expenditures – not least against the backdrop of the debt brake rule – to foster growth is therefore indispensable. Only with stable, sustainable economic growth can a sufficiently strong revenue base for public budgets be achieved. Investments in infrastructure such as roads, power grids, and digital networks are essential for the functioning of a modern economy. They provide the physical foundation that companies and their employees need to remain productive and competitive in the international arena. Investments in education, research and development, and renewable energies contribute to establishing the foundations for future growth. 

It remains essential that the financing of these investments happens in a sustainable manner. The state as a whole has enormous resources to finance its tasks. In 2008, total public tax revenues amounted to around 560 billion euros, and by 2025, more than 1,000 billion euros will be available to all government levels. Additionally, in the energy sector, the special fund "Climate and Transformation Fund" (KTF) provides an investment budget that, each year, is bolstered by its own revenues from CO₂ certificate trading and the CO₂ tax. The amount of expenditures allocated within the KTF – for example, for financing subsidy programs – should be capped by the described revenues of the fund (see chapter "Ensuring the Success of the Energy Transition"). 

Increased defense expenditures will also be financed until 2027 through a credit-financed special fund "Bundeswehr." Any new special fund that finances its expenditures entirely or predominantly through credit borrowing could, in the future, lead to higher tax burdens for businesses. Furthermore, modern institutions and well-functioning administrations are necessary to effectively and efficiently use the financial resources available. Improved framework conditions also ensure that companies invest more, and higher economic growth secures overall prosperity. 

In the interest of the general economy, public expenditures aimed at improving the general location conditions should generally be prioritized over subsidies. Regarding the efficient use of tax revenues, subsidies should only support long-term economic policy goals and prove effective in achieving these goals. Both aspects must be continuously evaluated, and subsidies reduced or discontinued as necessary. Additionally, the criterion of the impact on the growth potential of the economy should be applied for evaluations.

Good framework conditions for the economy require a high-performing public infrastructure and efficient governance in all regions of the country. Unfortunately, reality often paints a different picture: businesses increasingly experience significant regional disparities in the financial strength of their locations in Germany. These disparities lead to considerable differences in the provision of public infrastructure and business-related public services. The federal states should make greater use of their financial leeway to invest in infrastructure and the modernisation of public administration. The states are fundamentally required to address their constitutional responsibility for municipal budgets and thus for the quality of municipal conditions essential to businesses. This is particularly relevant to new responsibilities assigned to municipalities by the federal and state governments, which should be adequately funded.

Even before the COVID-19 pandemic and the current challenges stemming from the war in Ukraine and other geopolitical crises, many municipalities were unable to balance their budgets or structure them sustainably. Consequently, numerous municipalities have increased trade and property tax rates, introduced various local consumption and effort-based taxes, and levies—thus placing additional burdens on businesses. These additional costs and bureaucratic expenses reduce the attractiveness of locations for businesses and ultimately harm the sustainable revenue base of communities. Therefore, the revenue basis of municipalities should be reformed (see chapter "Tax Policy"). The aim of the reform should be to generate stable revenue tied to economic strength without raising the overall tax burden for businesses. Efficient task fulfilment at the municipal level, continuous review of tasks, and examination of prioritised expenses are also effective ways to reduce pressure for higher municipal business taxes.

The performance of municipalities could be enhanced by more frequent and intensive collaboration among municipalities, provided such cooperation is allowed. Municipal standards should also be permissible for fulfilment by cooperating municipalities. Public-private partnerships should also be utilised more widely. Such long-term partnerships could enable the provision and management of public infrastructure, wherein private partners would deliver and be accountable for all necessary services throughout a project's lifecycle.

The European Union has responded to economic challenges during the COVID-19 pandemic with the recovery programme 'Next Generation EU' (NGEU). NGEU provides €648 billion in grants and loans available until 2026 to support projects in Member States. Funds requested by Member States are released gradually, contingent upon measurable achievement of agreed milestones that benefit their economies. Member States commit to reforms and investments which are closely monitored by the EU Commission.

Given that the EU Commission borrows NGEU funds from the capital market, it's essential that the majority of funds are invested in projects with direct economic benefits. Businesses should experience improved economic conditions resulting from these investments, as they will bear a major portion of the future repayments and interest charges for this fund.
Germany shoulders a larger financial share of the NGEU fund, which narrows fiscal space in national budgets. Hence, efficient and targeted utilisation of NGEU funds must be thoroughly evaluated, particularly at the programme's conclusion in 2026. NGEU must demonstrate that its support enhances growth among Member States and generates returns sufficient to meet future financial obligations. As originally stated, the establishment of debt-financed EU funds should remain an exception. Regular EU expenditure should be funded via the EU budget, which is feasible with proper prioritisation.

The 'Performance-based Budgeting' principles applied in NGEU should extend to other policy areas. Similarly, the 'European Semester' seeks to align regular EU fund allocations, such as those from structural funds, with reforms or debt reductions. By the next Multiannual Financial Framework starting in 2028, these measures aim to strengthen the competitiveness of the entire European economic area, benefitting businesses in Germany in particular.

The German Chamber of Commerce and Industry (IHK) emphasizes the need for success monitoring in regular EU funding programmes. The key question isn’t just whether funding rules are followed but whether goals are achieved effectively. Independent evaluations of funds deployed, including administrative costs, are essential for gauging effectiveness and adjusting where necessary. The EU Commission should assess how EU-funded projects advance competitiveness within member states, using pre-defined, measurable criteria. Effective controls must ensure that EU funds are utilized economically, yielding maximum benefit for business. Private capital inclusion—for instance, through public-private partnerships—should always be evaluated for each project.

For quicker conversion of innovative ideas into marketable products, approval processes must be simplified and accelerated. Data requests from businesses should be limited to the minimum necessary. Especially, repeated proof submissions to various agencies (at both EU and member state levels) are superfluous and should be avoided.

The EU budget is financed through member state contributions. The so-called "GNI-own resources," determined based on the Gross National Income (GNI) of each member state and directly reflecting their economic performance, have proven simple and transparent.

However, there is a preliminary decision to cover the EU's additional financial needs by introducing new categories of own resources, such as revenues from the CO₂ border adjustment (refer to chapter "Climate Protection").

Additionally, the EU Commission has announced an EU single market levy and a European financial transaction tax. These alternatives are more complex than the GNI-own resources and carry the risk of competitive distortions among member states. For example, an EU single market levy primarily targets large corporate headquarters, whose economic activities are unevenly distributed across the EU. Instituting a charge tied to the use of the single market would even make a fundamental element of the European Union a payable service. Unequal distribution of fiscal burdens among EU states leads to varying levels of tax burdens for companies, significantly impacting location competitiveness. A financial transaction tax would primarily affect large financial centers, which only a few member states possess.