In 2025, this article was the Topic of the Week in the newsletter for calendar week 42.

Bureaucracy remains the biggest investment obstacle

The German economy has stagnated for over three years. Growing bureaucracy, in addition to high energy costs, taxes, and a shortage of skilled workers, is one of the major obstacles to investment. According to a current German Chamber of Commerce and Industry (IHK) survey, 95% of companies regard reducing bureaucratic burdens as a priority to strengthening Germany’s economic competitiveness.

Businesses demand tangible relief

For businesses, it’s clear: Germany urgently needs effective relief from bureaucracy. Endless reporting, documentation, approval, and statistical obligations prevent businesses from focusing on their core strength: developing quality products and services for people. This would enhance productivity, stimulate growth, and ultimately increase government revenues, which are key to fulfilling governmental responsibilities.

Burdens continue to rise

Green Deal, Supply Chain Due Diligence Act, EU Packaging Directive, Energy Efficiency Act: numerous recent regulations from Brussels and Berlin have triggered a record wave of bureaucratic requirements over recent years. And the flood continues, illustrated by the example of the so-called Tariff Loyalty Act. Additionally, true relief does not reach businesses – for instance in sustainability reporting. Although large corporations are likely to be directly obligated to report, these requirements place significant demands on smaller and medium-sized suppliers, who must provide evidence and information for the reports, creating a substantial burden on suppliers.

Estimates from the government indicate that the national implementation of EU sustainability reporting alone engenders annual costs of €500 million for German companies. Such burdens obscure mitigation effects felt elsewhere by businesses.

Reforms promise relief

There have been positive steps: For instance, the Fourth Bureaucracy Relief Act (BEG IV) eliminated formal written requirements, accepted digital solutions, enabled electronic employment references, and shortened tax-related document retention periods. These measures relieve the economy by €1.3 billion annually.

New government modernisation agenda

The agenda of the current government is far more ambitious. Businesses anticipate a cultural shift in legislation – from more rules to greater trust and freedom – driven by the new Ministry for Digitalisation and Government Modernisation (BMDS). Recently, Minister Karsten Wildberger presented the governmental modernisation agenda. These measures reflect longstanding proposals from the German Chamber of Commerce and Industry (IHK) and businesses. By implementing practical checks, regulations could be business-friendly from the initial draft. This should prevent excessive bureaucracy from occurring.

Additionally, the establishment of a digital bureaucracy reporting portal aims to respond promptly to business burdens. Many administrative services should see increased efficiency, such as enabling company formation within 24 hours. From a business perspective, firm and transparent implementation is now crucial: with clear monitoring, binding objectives, and real practical impact. Achieving the goal of reducing overall bureaucracy costs for businesses by 25% – equivalent to relief of approximately €16 billion – will otherwise be difficult.

Economy demands a reset

An economy on hold does not invest – and risks abandoning Germany as a location altogether. It’s time to hit a "reset button": stop everything that creates burdens. Examples like the swift approval for constructing LNG terminals or accelerated defence procurement have demonstrated that a faster "Germany-Speed" is achievable. Now, this pragmatism must be extended across the economy. A concrete strategy and binding roadmap are required: reduce hurdles, prioritise tasks, simplify, accelerate, digitalise. Only then will bureaucracy reduction transform from promise to reality – and Germany regains its competitive edge.

Impulses from the IHK conference

At the IHK conference "Reducing Bureaucracy and Better Regulation" on October 10 in Berlin, businesses conveyed their demands to representatives of the Federal Ministry for Digitalisation and Government Modernisation, the EU Commission, and members of parliament. During the proceedings, businesses agreed to advise policymakers in future processes. Bureaucracy reduction must happen now. Politicians should now follow through on their announcements with action.