The path to the scenario: Drivers and course-setting

• Political blockades in Germany and at EU level
• Growing conflicts over the distribution of state resources and attention
• Insufficient investment speed and level
• Adherence to the status quo in society and companies

Scenario world 2030

As in previous years, Germany is confronted with difficult government formations due to the increasing differentiation of the parliamentary party spectrum and the greater weight of the political fringes. Added to this are complicated federal and European negotiation processes. Mutual accusations in government coalitions are the order of the day and characterise the political culture. The resulting paralysis and lethargy of the political establishment is delaying future investments in infrastructure, the implementation of e-government or the twin transition in terms of sustainability and digitalisation. This is exacerbated by a lack of budgetary room for manoeuvre, which also means that there is hardly any political willingness to ease the burden. As a result of tight public finances and overburdened social systems, municipalities and the state can only provide public services to a limited extent, which makes conditions for society and the economy even more difficult.

Stagnation and standstill on many levels

The economy in Germany is treading water, the consumer and investment climate is clouded by entrenched expectations of stagnation and lengthy planning and approval procedures in Germany. Added to this are the increasingly noticeable effects of the shortage of labour and skilled workers, not only in the economy but also in public administration. There are also no real productivity gains or service gains through automation. Within Germany, there are increasing disparities between urban and rural areas, between structurally weak and structurally strong regions. In addition, the gap between successful and struggling SMEs is widening, for example with regard to investment in new technologies. External circumstances that lie outside the direct sphere of influence of SMEs have played a key role in driving this development (e.g. political delays, cancelled subsidies).

The lack of planning security in industrial SMEs is increasingly becoming an obstacle. In many sectors, a creeping loss of innovative ability and technological leadership can be observed, which is also a consequence of delayed investments. In view of volatile environments, these are and have been postponed further and further into the future. Transformation is also increasingly seen as a cost driver and additional bureaucratic effort rather than an opportunity for growth.

Industrial SMEs are facing growing competition, for example from imports from abroad - such as freight capacities from China - and factories operated by foreign companies in more cost-effective EU locations. The disparity in location factors within Europe (such as energy costs, bureaucracy, tax and duty burdens, availability of labour or pressure from globalised R&D work) is leading to a loss of orders and (creeping) relocations among large companies and SMEs. As a result, value creation networks are also increasingly disintegrating. This is accompanied by frequently changing suppliers and unstable customer relationships.

Medium-sized industrial companies break new ground

As a strategic approach during the crisis, some industrial SMEs are seeking to join forces with local politicians and regional stakeholders, particularly in structurally weak regions, in order to strengthen local locations and civil society. As a result, they are often unintentionally acting "politically", as they are increasingly taking on public tasks to recruit skilled labour - for example, childcare in company daycare centres or care services for employees' relatives. In doing so, SMEs are involuntarily filling a vacuum created by the underfunding or overburdening of social systems. As a crisis approach, some industrial SMEs are also focussing on occupying new niches by changing their business models. In doing so, they are trying to utilise their "meta-competencies" and dock onto new value creation networks (e.g. via service offerings) and new business ecosystems. These can be found in areas such as new space, biotechnology and water-sensitive infrastructures.

Consolidation and acquisitions

There is increasing consolidation and concentration in the German SME sector, which is changing its face to some extent as a result. In addition, foreign investors from Asia (especially China and South Korea), North America and neighbouring European countries are seizing the opportunity to enter the German SME sector - which in some cases entails a major cultural change or relocation.