German Chancellor Friedrich Merz has unveiled a comprehensive plan to modernise the state, involving digitalisation, support for AI and a radical simplification of administrative procedures – the goal: to restore the competitiveness of Europe’s largest economy.
Bureaucracy as a brake on growth
A report by the Ifo Institute indicates that excessive bureaucracy in Germany generates annual economic losses of €146 billion. In its modernisation programme, the government plans to reduce the administrative burden by 25 per cent, which would save €16 billion.
23 projects, from registration to immigration
Key initiatives include: centralised online vehicle registration, a 24-hour business registration platform and AI tools to support court and visa procedures. The government is also betting on simplifying the recognition of foreign medical qualifications and creating a digital agency to facilitate the admission of professionals from abroad.
This approach is part of a wider trend: the measurement of the so-called ‘bureaucracy index’ in Germany shows a systematic increase in the volume of regulation (by 60 per cent between 2010 and 2024).
Challenges and conditions for success
The implementation of the plan requires not only legislative amendments, but also a cultural change in the administrative apparatus – without real simplification, new regulations can generate new layers of complexity. Legal constraints on the reduction of civil servants are also being studied, especially in the regions and local authorities.
In addition, the government has added the energy of the future to the programme, including approving €1.7 billion for the construction of a nuclear fusion reactor and the acceleration of hydrogen infrastructure.
If the initiative passes the Bundestag and Bundesrat, Germany could become the laboratory of the digital state in Europe – provided the reform is not strangled by structural resistance and parliamentary bureaucracy.
