The path to the scenario: Drivers and course-setting

• Transformative public investment programme through expanded financing scope
• Modernisation of administration, fewer taxes and duties and less bureaucracy
• Reliable political framework supports planning security and thus long-term investments
• National transformation strategies lead to competition and disagreements within the EU
• Increasing social value of performance and entrepreneurship

Scenario world 2030

The German economy is growing dynamically and is on a path to climate neutrality thanks to a national transformation strategy. The necessary course was set in the mid-2020s and required decisive action in politics, society and business at the time.

The forward-looking public investments (e.g. energy, transport, industry, education, social housing) are having an impact and strengthening the location in international competition. The process of agreeing on an investment plan and financing instruments is not without friction in politics and business, but is ultimately successful. Access to capital (non-bank and bank-based financing) has improved for industrial SMEs. SME investment is now significantly higher, for example in renewable energies and AI systems to increase labour productivity. The more positive view of the long-term future is also reflected in the robust consumer and investment behaviour of households.

The increased willingness to compromise in society supports political reforms, infrastructural modernisation and investments by SMEs and foreign companies (e.g. acceptance of construction projects). The shortage of skilled labour is being significantly mitigated by increased immigration, extended weekly and lifetime working hours and the digital transformation. There are various reasons for the stronger focus on performance in society, including financial considerations and changing values. Industrial SMEs are increasing investment in training and further education measures in order to mitigate the shortage of skilled labour and prepare the workforce for changing job profiles and skills requirements.

Growing importance of entrepreneurship and flourishing start-up landscape

The stronger focus on performance in German society is also reflected in successful company successions and an increase in start-ups. Start-ups are launching on greenfield sites and utilising new technologies and processes that have become available as a result of technological leaps in development. Time and again, former start-ups have established themselves as "new" SMEs, thereby increasing competitive pressure. Industrial SMEs are proactively promoting the flourishing start-up landscape and integrating promising start-ups into value creation networks at an early stage.

SMEs in the green and digital transformation

The clear regulatory framework and public investment ensure planning security for industrial SMEs and business partners at the location. This successfully incentivises investment in climate-neutral processes, resource efficiency and digital technologies. SMEs not only specialise in individual, separate products or services, but also develop holistic product-service systems and B2B platforms. In this way, SMEs are also successfully tapping into new export markets in promising emerging and developing countries. However, not all SMEs can keep up with the pace of change brought about by technological transformation and changing regulatory requirements. Despite the economic dynamism, some SMEs that have been left behind are going out of business.

Increased competition within the EU

However, other EU members are also pushing ahead with national transformation strategies. In the EU, there is intense intra-European competition, protectionist tendencies and intra-European disputes, for example over incentive systems and the organisation of sustainability taxonomies. The competition also manifests itself in intra-European competition with regard to taxes and duties as well as incentives for companies to relocate. European companies and EU countries that are particularly affected by demographic change are competing for skilled labour from outside Europe and are also poaching skilled labour from each other. Competition between EU member states and entrepreneurial competition have a positive effect on innovation and productivity increases in SMEs.

Integrated value chains at the location: between structural change and resilience

National import strategies secure the supply of energy and critical raw materials, sometimes at high prices. Rising commodity prices and competition for them is a consequence of ambitious global climate targets. This is due to the fact that the negative effects of climate change are increasingly being recognised as a challenge worldwide - for example, due to rising health costs or crop failures in China and India. German and European industrial policy emphasises the added value of energy-intensive industry in terms of synergies in value creation networks, resilience and climate protection. The competitiveness of the energy-intensive industry is therefore being strengthened by various political measures as part of the transformation efforts. Despite other differences, effective protective measures are being established at EU level to counteract the migration of industry to countries with lower ESG standards. This external protection is a shared interest that stabilises the EU.