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In line with the federal system, structuring and coordinating economic and financial policy is the joint task of central government, the federal states and municipalities. They cooperate in various committees. Furthermore, the Federal Government seeks the advice of independent economists. Every January the Federal Government presents to the Bundestag and the Bundesrat the Annual Economic Report, which among other things describes the government’s economic and financial goals for the year as well as the fundamentals of its planned economic and financial policy. One prerequisite for economic life in Germany being able to function is free competition, which is protected by the law against restrictions on competition. It prohibits anti-competitive practice on the part of both companies and the state. Likewise, company mergers, state subsidies and market barriers are assessed to establish whether they impair competition.
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Every four years, the parties stand in the general elections to the Bundestag. Traditionally, the turn-out is high in Germany, and following a high in the 1970s, when the turn-out was over 90 percent, since reunification it has been around 80 percent. 76.6 per cent of eligible voters took part in the election to the 20th German Bundestag in 2021.
In 1957, Germany was one of the six founding members of today’s EU, along with France, Italy, Belgium, the Netherlands and Luxembourg. The EU is currently made up of 27 states; the euro is the official currency in 20 of them. For Germany, European integration forms the basis for peace, security and prosperity. One of the key factors is the single European market. Germany also supports the integration of additional members in the EU..
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The Federal Government and cabinet is made up of the Federal Chancellor and the Federal Ministers. While the Chancellor holds the power to issue directives, the ministers have departmental powers, meaning that they independently run their respective ministries in the framework of those directives. Moreover, the cabinet abides by the collegial principle, in disputes the Federal Government decides by majority. The affairs of state are managed by the Chancellor.
The Basic Law of the Federal Republic of Germany does not call for any particular economic order. Yet it is firmly anchored in the principle of the welfare state and therefore excludes a purely free market economy. Since the founding of the Federal Republic of Germany in 1949 the country’s economic policy has been hinged on the notion of the social market economy. The social market economy was developed and implemented by Ludwig Erhard, the first Minister of Economics and later German Chancellor. The fundamental idea is based on the principle of freedom of a market economy, supplemented by socio-political methods for keeping a due balance in society. On the one hand, the system is designed to enable market forces in principle to develop freely. On the other, the state guarantees a welfare network that protects its citizens from risks.
The Bundestag is made up of the elected representatives of the German people. In principle elections to the Bundestag are proportionally representative, with each party’s share of the vote in the election reflecting the number of seats it occupies in the parliament. But the electoral system also contains elements of majority voting: citizens cast a first vote for a candidate in a constituency and a second vote for a party’s state list. The Bundestag normally has 598 members by law, but this number has recently been significantly higher due to a system of so-called “overhang mandates” and “balancing mandates”. The plan is to amend the law to change this system, thereby ensuring that the number of parliamentarians is limited in future. One requirement for entry into parliament is the so-called five per cent hurdle: parties only sit in parliament if they win at least five per cent of the national vote.
The Bundestag is the German parliament. Its elected representatives are organized in parliamentary parties and select a President from among them. It is the function of the Bundestag to elect the Federal Chancellor and keep him in office through support for his policies. The members of parliament can relieve the Chancellor of his duties by denying him their confidence, as do other parliaments. Nor does it make any great difference that in Germany the Chancellor is elected, whereas in Great Britain and other parliamentary democracies he is appointed by the head of state. In other parliamentary democracies, a party leader who can rely on a parliamentary majority is always appointed head of government.
The second major function of the elected representatives in the Bundestag is to pass legislation. Here, again, the Bundestag is similar to parliaments in other parliamentary democracies in that it for the most part enacts bills proposed by the Federal Government. The Bundestag however, which resides in the Reichstag building in Berlin, is less like the debating parliament typified by British parliamentary culture and corresponds far more closely to the US type of so-called working parliament. The Bundestag’s expert parliamentary committees discuss the bills introduced to Parliament in detail.
The Bundestag’s expert Parliamentary Committees discuss the bills introduced to Parliament in great detail. Here, the activities of the Bundestag resemble to some extent Congress in the USA, the prototype of a working parliament. The third major function of the Bundestag is to keep a check on the government’s work. It is the opposition that fulfills the function of monitoring the work of government in a manner visible to the general public. A less evident, but no less effective form of control is carried out by the members of parliament of the governing parties, who behind closed doors ask the government representatives critical questions.
The United Nations (UN) has a key role to play in the international system. Germany has been a UN member since 1973. Since joining, Germany has taken on more and more responsibility and is now one of the largest donors and supporters of the United Nations. For example, Germany is the second largest contributor to the UN system as a whole and takes part in UN peace missions. Germany is also home to more than 30 UN institutions. The most important location is Bonn, the former capital of the Federal Republic of Germany before German reunification. Germany is committed to reforming the United Nations so that the international community can effectively tackle the diverse global challenges.