Germany Launches AI-Driven 'Modernization Agenda' to Revitalize Economy and Cut Bureaucracy

Chancellor Merz Unveils Ambitious Economic Revitalization Plan

German Chancellor Friedrich Merz announced a far-reaching 'Modernization Agenda' on October 1, 2025, designed to reinvigorate the nation's economy and significantly reduce bureaucratic hurdles. Speaking at a press conference at the Borsig Palace on Berlin's outskirts, Merz outlined 23 key projects that will harness artificial intelligence (AI) and digital solutions to achieve these goals.

The initiative comes as Germany, Europe's largest economy, faces considerable challenges, including two years of economic contraction, high energy costs, and labor shortages. A study by the Ifo economic institute indicated that excessive bureaucracy costs Germany nearly 150 billion euros annually in lost economic output.

Key Pillars of the Modernization Agenda

The 'Modernization Agenda' is built upon several strategic pillars, aiming to streamline public services and foster a more competitive business environment. A central objective is to reduce bureaucratic requirements by 25% in the coming years, with a target of achieving this by 2029, potentially saving 16 billion euros. Digitalization Minister Karsten Wildberger has emphasized the urgency of embracing AI to prevent Germany from falling behind in technological advancement.

Among the 23 projects, several stand out for their direct impact on citizens and businesses:

• A centralized online vehicle registration service.
• A platform enabling companies to be formed within 24 hours.
• The implementation of AI-based tools to assist with court and visa verification processes.
• Accelerated recognition procedures for foreign qualifications in medical professions.
• Creation of a digital agency to facilitate the immigration and integration of skilled workers into the German labor market.
• An online platform to centralize information on export rules and credit options for export-oriented businesses.

Investment in Future Technologies and Infrastructure

Beyond administrative reforms, the agenda includes significant investments in cutting-edge technologies and infrastructure. The cabinet approved a plan to build a nuclear fusion reactor in Germany, allocating 1.7 billion euros in funding for the project. Additionally, a draft law to accelerate the development of hydrogen infrastructure by reducing bureaucracy was given the green light.

This modernization drive is part of a broader economic strategy that includes a half-trillion-euro infrastructure and defense package aimed at jump-starting growth. The government also plans to introduce legislative proposals to the German Bundestag this month to ensure the swift implementation of these measures.

Addressing Economic Headwinds

Chancellor Merz acknowledged the current economic difficulties, stating, 'We are of course aware of the problems facing the German economy at the moment, but we aspire to return to the top.' The 'Modernization Agenda' is seen as a critical step in restoring Germany's competitiveness and addressing the structural issues that have hindered growth. The government aims to move past economic stagnation and reclaim its position on the global stage through these strategic reforms and investments.