Germany “to the top” – Comprehensive modernization agenda with 80 measures – Plan carries a 110 billion euro risk – Image: Xpert.Digital
Laws as code, AI in the ministry: This is how radically the government wants to restructure the state – Germany's expensive path to the top
Lower taxes, faster government offices: These 3 changes from Merz' mega-plan affect everyone
Chancellor Friedrich Merz has presented an ambitious plan to make Germany a leading economic nation once again. With his promise to bring Germany "back to the top," the CDU politician has launched a comprehensive modernization agenda with 80 concrete measures intended to fundamentally transform the country.
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The vision of a modern nation
Following the conclusion of the two-day cabinet retreat at Villa Borsig in Berlin, Merz underscored Germany's ambition for a leading position in international competition. "We aspire to return to the top," the Chancellor declared, referring to a newly adopted "high-tech agenda" which he described as "comprehensive" and "really good for our economy.".
The black-red coalition has set itself the goal of creating a "fast, digital and effective state" that "makes decisions more quickly, delivers more reliably and strengthens trust". This vision reflects Merz's conviction that Germany has all the necessary resources to master the economic challenges.
Five areas of action for modernization
The modernization agenda is strategically divided into five key areas of action, each addressing specific aspects of state renewal:
Noticeable reduction in bureaucracy
The first area of action focuses on eliminating unnecessary bureaucratic burdens for citizens, businesses, and public administration. The government plans a drastic reduction in bureaucratic costs by 25 percent, which will translate into savings of approximately 16 billion euros by the end of the legislative period in 2029. To achieve this, a strengthened bureaucracy brake will be introduced, requiring the elimination of two existing bureaucratic burdens for every new regulation.
A particularly innovative element is the establishment of a digital bureaucracy reporting portal, through which citizens and businesses can report unnecessary regulations. In addition, AI-supported tools are intended to help employees in ministries to make legal texts more practical and less bureaucratic.
Better legislation
The second area of action revolutionizes the way laws are created. New regulations are designed from the outset to be audience-oriented, practical, and digitally compatible, enabling automation. A key element here is "Law as Code," which makes laws machine-readable and digitally implementable.
The government aims not only to simplify legislation but also to ensure that it promotes rather than hinders technological innovation. This approach is intended to lay the foundation for more efficient administration and improved public services.
Citizen- and business-centric service
The third area of action fundamentally transforms administrative services. Administrative processes are being systematically digitized, and the state is perceived more strongly as a partner of citizens and businesses. Accelerating procedures is central to these efforts.
A key project is the nationwide online vehicle registration system, which will relieve the burden on over 400 regional registration offices and enable significant time and cost savings for citizens and businesses. In parallel, a standardized 24-hour business start-up process is being introduced, consolidating the approximately 6,000 different process variations currently in use.
Future-oriented personnel development
The fourth area of action focuses on modernizing the human resources management of the federal administration. The government plans a comprehensive modernization of civil service law, targeted skills development, and a strengthening of the merit principle. Agile team structures and a positive error culture based on trust are intended to improve service quality.
At the same time, a strategic realignment of human resources management is planned in order to better meet future challenges. This includes both the promotion of future-oriented skills and modern forms of collaboration.
Efficient federal administration
The fifth area of action aims at a fundamental streamlining of administrative structures. The federal government's workforce is to be reduced by eight percent, while operating costs are to decrease by ten percent. In addition, a reduction in the number of federal agencies and administrative units is planned.
The consolidation of the federal government's data centers, IT services, and networks will be intensified, and software and AI applications will be developed and procured centrally. Continuous monitoring via an evaluation portal will measure and manage progress.
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Evaluation instead of promises: This is how the government wants to ensure progress
Leverage projects for noticeable change
The modernization agenda defines 23 key lever projects designed to deliver concrete and rapid improvements. These projects range from the digital transformation of everyday administrative processes to innovative solutions for complex societal challenges.
One particularly important project is the establishment of a digital "work-and-stay agency," which significantly facilitates the immigration of skilled workers and their integration into the German labor market. Visa matters and the recognition of professional qualifications can be handled centrally via this platform, which is of great importance given the acute shortage of skilled workers.
For export-oriented companies, an AI-supported platform is being created that consolidates information services from foreign trade promotion and development cooperation. This initiative aims to help German companies tap into new markets and strengthen their international competitiveness.
Another focus is on accelerating planning and approval processes, the so-called "construction turbo". This measure is to be introduced to parliament this year and should enable significantly faster procedures in housing construction.
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Economic policy foundations of the reform
The modernization agenda is part of a broader economic policy strategy aimed at restoring Germany to its position as a leading economic nation. Merz has already set important courses in his first 100 days in office, including a comprehensive tax reform for large and medium-sized companies.
The key elements of the economic relief package include accelerated depreciation, allowing companies to write off investments in new assets faster than ever before. Up to two-thirds of the value can be written off in two and a half years. In parallel, a reduction in corporate tax is planned, decreasing by one percentage point annually from 2028 and reaching its lowest level ever in Germany by 2030.
The CDU/CSU election manifesto includes further far-reaching tax reforms. The top tax rate would only apply to incomes above €80,000 instead of the current threshold of almost €70,000. The solidarity surcharge would be completely abolished, and overtime pay for full-time employees would be tax-free.
Technological openness as a competitive advantage
A central aspect of Merz's vision is technological openness as the key to Germany's return to the top of the world. The Chancellor emphasizes that it must be left to engineers, developers in companies, universities, and researchers to develop new technologies. Europe needs technologies that are environmentally friendly and simultaneously create competitive advantages.
This stance is reflected in the "Made for Germany" initiative, in which 61 major companies plan to invest up to €631 billion in Germany by 2028. Merz sees this as one of the largest investment offensives in decades and wants to strengthen public investment through private capital in order to trigger sustainable growth effects.
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Challenges and criticism
Despite the ambitious plans, Merz and his government face considerable challenges. The German economy has been stagnating for over two years, and experts are skeptical whether the proposed measures will be sufficient. Leading economic research institutes continue to forecast weak growth, with only 0.2 percent for 2025 and 1.3 to 1.4 percent for 2026/2027.
Representatives of business associations are increasingly expressing impatience with the pace of reforms. At a summit in the Chancellor's Office, the heads of the four largest associations gave Chancellor Merz a dressing-down and urged faster reforms. The business community complains of "tangible disappointment" and demands more concrete progress in improving business conditions.
The financing of the planned reforms is also a cause for concern. Economists estimate that the tax cuts and other relief measures could create a funding gap of between 87 and over 110 billion euros. Since the debt brake is sacrosanct for the EU, the question arises as to how this gap will be closed.
International dimension and European leadership
Merz's ambitions extend beyond national borders. He sees Germany as having a responsibility to assume a leadership role in Europe and to strengthen European competitiveness. An unpublished study by the CDU-affiliated Konrad Adenauer Foundation shows that Europe has lost considerable global competitiveness in recent years.
The EU's share of global exports fell from 16.3 percent in 2016 to 14.3 percent in 2023. The foundation advises Europe to pursue comprehensive economic partnerships with emerging economies, but experience with the Mercosur agreement shows how protracted such negotiations can be.
Implementation and success measurement
The modernization agenda is designed as a binding, cross-departmental roadmap with clear deadlines and continuous monitoring. The first projects are to be implemented immediately, and progress will be regularly reviewed by the cabinet.
An evaluation portal for measuring and managing progress is intended to ensure that the goals are actually achieved. This systematic approach differs from previous reform attempts and is designed to guarantee the necessary implementation discipline.
Experts caution, however, that the crucial question is whether projects and deadlines can actually be met. WirtschaftsWoche describes the package as a "liberating move," but sees parallels to previous attempts and points to the need for measurable progress on long-standing issues such as the unbundling of responsibilities.
Optimism despite challenges
Despite all the difficulties, Merz remains optimistic and appeals for a new German mentality of optimism and a can-do attitude. He points to concrete figures that justify this hope: Investment commitments from foreign companies to Germany have increased by a third in recent weeks, and these commitments are expected to grow to 900 billion euros over the next three years.
Merz's message is clear: "The glass is not half empty. The glass is half full. And we are now making sure that we fill it up." This attitude also shapes his approach to the modernization agenda, which he positions as the starting point for an accelerated legislative and implementation process.
The 80 measures of the modernization agenda represent a comprehensive attempt to equip Germany for the challenges of the 21st century. Whether this ambitious plan will actually lead to Germany returning to the forefront will become clear in the coming years. Crucially, the individual measures will be implemented consistently, meeting both the expectations of the business community and the needs of citizens.
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