The German government is adding billions of euros into a new fund, and hoping to attract investments worth 100 billion more, in a bid to support new businesses and innovation.
Berlin launched a “Germany Fund” on Thursday that aims to gather up to 130 billion euros of investment in startups as Chancellor Friedrich Merz battles to pull Europe’s top economy out of its slump.
About 30 billion euros of public money would be used, mostly in the form of guarantees, to attract a further 100 billion euros of private investment in firms working in critical sectors such as artificial intelligence, defence and robotics, said Finance Minister Lars Klingbeil.
“We are creating a one-stop shop that you can call or email, a place where investors can be while we try to get Germany back on track,” he told a press conference.
“We want the jobs of the future to be in Germany, we want that ideas that originate in Germany can also grow in Germany.”
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Germany’s economy, facing fierce Chinese competition and high production costs, was in the doldrums even before US President Donald Trump slapped the European Union with hefty tariffs this year.
Merz has promised to spend hundreds of billions on rearmament and revamping creaky infrastructure, but critics have warned bolder action will be needed to tackle deep structural problems.
Businesswoman Verena Pausder, head of Germany’s Startup Association, welcomed the fund but said more needed to be done to help German start-ups grow into large firms.
“We need to see more from the government given the missing billions when it comes to financing growing companies,” she said. “It will be critical to build out and supplement the Germany Fund.”
Leading institutes this month cut their growth forecasts for the German economy, with the Ifo institute predicting just 0.8-percent growth in 2026, down from 1.3 percent at its previous forecast.
Ifo economist Oliver Falck told AFP more would have to follow the Germany Fund to substantially boost the economy.
“The establishment of a Germany Fund does not release the German government from its obligation to deregulate, reduce bureaucracy, improve public infrastructure and create predictable and reliable framework conditions for the energy transition,” he said.
Klingbeil said the guarantees would also be used to boost defence while Germany grapples with an emboldened Moscow and uncertainty about the United States’ commitment to ensuring European security.
“The Germany Fund has drawn lessons from the Russian war of aggression in Ukraine,” he said. “We saw there that we need to be able to innovate at speed when it comes to security and defence.”
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