Germany’s recovery and resilience plan

Following an unprecedented crisis due to the pandemic, Germany’s recovery and resilience plan responds to the urgent need of fostering a strong recovery and making Germany ready for the future. The reforms and investments in the plan will help Germany become more sustainable, resilient and better prepared for the challenges and opportunities of the green and digital transitions. To this end, the plan consists of 40 measures. They will be supported by €25.6 billion in grants. At least 42% of the plan will support climate objectives and at least 52% of the plan will foster the digital transition.

The transformative impact of Germany’s plan is the result of a strong combination of reforms and investments which address the specific challenges of Germany. The reforms address bottlenecks to lasting and sustainable growth while investments are targeted to decarbonise and digitalise all domains of German society. The plan will also strengthen social cohesion and education while unlocking Germany’s investment potential by addressing current bottlenecks. All reforms and investments have to be implemented within a tight time frame, as the Regulation establishing the Recovery and Resilience Facility provides that they have to be completed by August 2026.

The plan will foster economic growth and create jobs. It will lift Germany’s gross domestic product by 0.4% to 0.7% by 2026. This boost to the economy will bring up to 135 000 people into jobs. Germany will benefit significantly from the recovery and resilience plans of other Member States, for instance through an increase in exports and spill-over effects from investments and reforms in other EU Member States. Cross border (GDP) spillovers account for 0.4 pps in 2026. This demonstrates the added value of joint and coordinated action at the European level. These estimates do not include the possible positive impact of structural reforms, which can be substantial.

+ 0.4-0.7%

Impact of NextGenerationEU on Germany's gross domestic product by 2026

+ 135,000

Jobs by 2026

0.4%

Gross domestic product benefits thanks to other Member States’ recovery and resilience plans in 2026

When designing the plan, Germany’s authorities consulted national and regional social partners and stakeholders, while pursuing a close dialogue with the Commission ahead of the formal submission of the plan on 28 April 2021. On 22 June 2021, the Commission gave its green light to the plan. On this occasion, President von der Leyen presented the Commission’s assessment to Chancellor Merkel during a visit in Berlin. The plan was in turn adopted by the Council on 13 July opening the door to its implementation and financing.

Green transition

In the area of climate and environmental policies, Germany faces the challenge of decarbonising its industry. Reducing greenhouse gas emissions also requires that Germany makes its transport sector more sustainable and renovates its building stock, to increase its energy efficiency.

Key measures for the green transition

The plan includes €3.3 billion devoted to decarbonising the economy, especially the industry, with a focus on renewable hydrogen; as part of a Europe-wide effort, €1.5 billion will be invested to help the German economy make the leap towards renewable hydrogen at all stages of the value chain (including production, infrastructure and use). €5.4 billion will be devoted to making the transport sector greener by supporting electric cars, clean buses and rail. For instance, the plan will provide financial support for the purchase of more than 560 000 zero- or low-emission vehicles. €2.5 billion will be spent on a large-scale renovation programme to increase the energy efficiency of residential buildings.

Example project:Support for German residents to buy electric cars

Germany’s recovery and resilience plan will help citizens shift to clean electric vehicles by giving financial support to buy more than 560,000 decarbonised vehicles. The measure will reduce the purchase prices of electric vehicles, which is usually higher than the price of vehicles with internal combustion engines, and stimulate the market. It is complemented by other measures of the plan such as financing the installation of 50,000 publicly accessible recharging points and of 400,000 further recharging points in residential buildings. The promotion of electro-mobility is essential to achieving the Paris climate goals in the transport sector.

Digital transition

Digital challenges for Germany include lagging investments in digital infrastructure which would support the economic recovery and help reduce Germany’s gap with other countries in the coverage of very high-capacity networks. Moreover, there is a significant potential for improving the digital skills of the population, especially when it comes to ICT and education specialists.

Key measures for the digital transition

Germany’s recovery and resilience plan supports the digital transition with several investments and reforms. Important measures of the plan include:investments in an Europe-wide initiative in microelectronics and communication technologies for €1.5 billion; investments in a Europe-wide initiative on next generation cloud infrastructures and services for €750 million and making more than 115 federal and 100 regional public services digitally available by 2022, in line with the Online Access Act (€3 billion). The plan will also modernise and interconnect registers to reduce the administrative burden for businesses and citizens (€275 million) and create the first national online education platform to help learners acquire competences based on their individual learning pathways (€630 million).

Example project: Large-scale cross-border European initiative on cloud and microelectronics

To enable the digital transition, an Important Project of Common European Interest (IPCEI) on microelectronics will ensure that Europe can compete in this crucial high-tech industry by improving the EU’s capabilities in electronics design and preparing the deployment of the next generation of low-power processors.
A second IPCEI will deliver for Europe the next generation of cloud services and infrastructure, to foster the industrial deployment of smart cloud and edge solutions that are highly innovative, highly secure, energy efficient and fully compliant with data protection.

Economic and social resilience

Key macro-economic challenges for Germany’s economy include subdued investments compared to savings due in part to regulatory investment bottlenecks. Moreover, while Germany performs well on employment, certain disadvantaged groups (including people with a migrant background) and women could be better integrated in the labour market. The education sector also faces an investment backlog in addition to new digital needs created by COVID-19.

Key measures in reinforcing economic and social resilience

The plan includes a reform to cap social contributions and another to provide additional courses and mentoring to pupils with a learning backlog, with a focus on core subjects and core competences to tackle the learning disparities created by the COVID-19 crisis.
€500 million will also be spent to create 90,000 additional childcare places by building new childcare facilities and refurbishing existing ones. The plan will also devote €725 million to supporting apprentices during the crisis. Public administration reforms and investments to strengthen the healthcare system (€3 billion to digitalise hospitals and €814 million to modernise public healthcare offices) will also increase resilience. This will be complemented by a package of reforms to unlock public investment and tackle investment bottlenecks.

Example project: Joint programme at national and regional levels to tackle investment bottlenecks

This programme will identify and implement concrete proposals to shorten administrative planning and approval procedures, to standardise requirements to request financing subsidies, to accelerate housing construction and to increase the number of successful transfers of business ownership to the next generation. It will be complemented by an expansion of the administrative capacity of the public consulting agency PD Deutschland and an acceleration of planning and approval procedures in the transport sector. These reforms will contribute to facilitating investment and administrative processes for citizens and businesses, thus unlocking the full potential of Germany’s recovery and resilience plan.

The plan is consistent with relevant country-specific challenges and priorities identified in the European Semester, the annual cycle of coordination and surveillance of the EU’s economic policies. For a detailed explanation of the European Semester see the following link: The European Semester explained | European Commission (europa.eu)