The Christian Democratic Union (CDU), Christian Social Union (CSU), and the Social Democratic Party (SPD) have presented their coalition agreement on 9 April 2025. Germany’s top executives are watching the formation of the new government closely—and with an eye on the time.
An analysis of 57 earnings conference calls from companies of the DAX family used for the SAFE Manager Sentiment Index in March reveals that business leaders are less focused on specific policy proposals than on the speed and clarity of government formation. As one executive put it, “I certainly hope it doesn’t [take long], so that we get a government fast.” Their hope is clear: the sooner a functioning coalition is in place, the better for business confidence and investment. With memories of the recently collapsed “traffic light” coalition still fresh, leaders across sectors are cautiously optimistic—but now they expect results.
Perhaps boring but stable: Why a grand coalition is welcomed
While policy specifics may be secondary for now, the overall political direction of the new government matters. In the calls held from December 2024 to February 2025, executives expressed a preference for what they see as a stable and decisive partnership which produces results and does not get lost in political bickering. “The so-called black-red coalition, and I think that's good in the sense that it means a new coalition agreement can be negotiated quickly and we can get stability and clarity.”
This sentiment isn’t about party loyalty – it’s rooted in experience. The parties’ longstanding roles in the country’s political system give the impression of predictability and competence. One executive framed it this way: “It is much better to talk about ideas, about investments, about needs for the build-out with [...] one government and representing the big parties here, then trying to do that with the opposition.” There was also early praise for Friedrich Merz, the likely chancellor. “[What Merz] has said is pro economy. He is pro industry. He is pro debureaucratization. […] I’m optimistic about that.”
The best available outcome needs to deliver
Finally, there was a quiet sense that German business leaders may have gotten the best available outcome from the election: a stable two-party government at a time when political fragmentation and lengthy and inconclusive processes of government formation are common across Europe. This new government now feels almost doomed to succeed—because it may be the last grand coalition with a majority if it fails to deliver.
Investment, deregulation, and the mood of the market
Aside from political stability, business leaders have identified two key priorities for the incoming government: enabling investment—both public and private—and easing regulatory burden.
Executives see the government formation both as a political process and an economic signal. Having positive expectations is important for the economic outlook: “We now need a new government to form quickly in Germany that can have a positive effect on the mood and the investment climate in Germany.” Another noted shortly before the election date that “Clients are prepared to also invest in Germany, but that is very much pendent on the outcome of the election.”
Regulatory relief is wanted, planning certainty is needed
Though public investments in infrastructure and defense have already been initiated, leaders are calling for a more supportive environment for private capital. The announced reforms to simplify the private pension system are likely to gain their approval as they expressed hope the new government might revisit this policy field.
The call for regulatory relief is clear: “And our main expectation is not about further increasing the volume, so the regulation what we have right now is really ambitious.” The coalition announces a major reduction in red tape. Managers seem to remember the mismatch between grand announcements and meager actions of past governments and expressed realistic expectations in the March earnings calls. One executive cautioned against assuming immediate change: “I think the necessity of the return on the regulated business side is independent of the election. It was a problem before. It is a problem afterwards. [...] So I see the impact of [the election] actually limited.” Business leaders seem to want a steadier ground to plan and grow. Regulatory relief may be welcome but planning certainty is the key demand.
Politics moves to center stage
Compared to 2021, the formation of a new government and its agenda got far more attention from top executives. In the three months preceding the 2025 election, 19% of earning calls mentioned the words “government” or “election(s),” compared to just 8% in the same period before the 2021 election. Back then, political talk was mostly limited to sectors like housing and energy—areas directly impacted by government policy. Now, everyone’s got a stake This shift reflects the stagnation of the economy since 2023 and global economic policy uncertainty, driven largely by the re-election of Donald Trump and the renewed tariff wars. While companies listed in Germany appear ready to handle new tariffs, their appetite for additional uncertainty is low. A stable German government, even one built on compromise, suddenly looks like a much-needed anchor.
Conclusion: Steady Hands, High Hopes
Germany’s business leaders aren’t setting unrealistic expectations. They’re asking for a functioning government that can provide stability, engage pragmatically, and set conditions for investment and competitiveness. There’s an underlying belief that this coalition—between two deeply rooted parties, led by a chancellor seen as pro-business—has the tools to deliver. But with that belief comes pressure: having gotten what looks like the most stable outcome possible, companies now expect results.
Alexander Hillert is Co-Director of the SAFE Department “Financial Intermediation” and Professor for Finance and Data Science.
Vincent Lindner is Financial Policy Officer at the SAFE Policy Center.
Elena Munteanu is Student Assistant at the SAFE Data Center.
Blog entries represent the authors’ personal opinion and do not necessarily reflect the views of the Leibniz Institute for Financial Research SAFE or its staff.
