German construction can drive economic recovery, industry tells new government

That’s the message from organisations representing companies in the sector to the new leaders of its federal government, following an election that saw the conservative CDU win a majority and the party’s Friedrich Merz take over as Chancellor.

Merz will now try to form a coalition made up of the CDU and Bavarian sister party, the CSU, with the left-leaning SPD. The second-placed far right party, Alternative für Deutschland (AfD), won a record share of the vote but is expected to be kept out of any governing coalition by the other parties.

Tim-Oliver Müller, general manager of Bauindustrie, a major German construction industry association, called for a new federal budget and a “clear focus on a clear economic and industrial policy“.

He added, “With its large share of GDP, the construction industry is one of the growth drivers and a cornerstone for a new growth concept. For this to succeed, a strong construction department is needed that will launch an investment programme worth billions to modernise the industrial sector, provide living space and also to restore defense capability.“

And he made an urgent call for money to be invested now, in addition to a reduction in bureaucracy for construction projects.

Meanwhile, the Central Association of the Germany Construction Industry (ZDB) called for “decisive action” from the new federal government to formulate a new housing policy.

ZDB’s general manager Felix Pakleppa said, “Economic development in the construction industry remains divided. While residential and commercial building construction continue to struggle with weak demand, civil engineering is benefiting from investments in the energy and mobility transition. Projects such as the expansion of power lines, the modernization of the rail network, the expansion of broadband and improvements in local public transport are providing stable impetus.”

Despite some bright spots in construction, thanks to a small increase in orders over the past two months, the difficult situation the sector finds itself in is “far from over”, according to Pakleppa, and the government will miss its target of building 400,000 apartments a year, he said.

“This is not just about pure numbers, but about ensuring an adequate supply of housing - a crucial factor for social peace in Germany. The new federal government must therefore urgently create investment-friendly framework conditions that give housing construction a noticeable boost. The foundation for a new housing policy must now be laid,” he added.

Germany’s election came after former Chancellor Olaf Scholz’s three-party coalition government collapsed late last year. However, it could take until Easter for a new coalition government to be formed.