
Simple State Agenda
As part of its “Simple State” agenda, the BDI has convened an expert group on state modernization to drive structural reforms of government and administration. The project aims to sustainably strengthen Germany’s competitive position, digital readiness, and overall capacity to act. The group will support and advance the modernization agenda of government agencies with actionable recommendations at the state and federal levels. It includes representatives from government, business, and academia. They are united in their conviction that government and business must act as true partners to enable transformation and growth.
To that end, the expert group is developing an integrated vision of an efficient, digital state that is oriented toward its citizens and businesses — with clearly defined responsibilities, fewer interface problems, and a can-do culture that gives public authorities more room for discretion and emboldens their decision-making. It is an undertaking that demands patience and real political ambition; small steps alone will not be enough.
With that in mind, the BDI Expert Group on State Modernization recommends we:
Simple State Agenda on Social Media
Simple State – Chapter 1

Bureaucracy costs the economy a lot of time and money. It hampers business transfers and startups, and it slows investment in people, machinery, and business models. The bureaucratic workload plays an important role in how Germany and Europe are perceived as business locations in international competition.
Encouragingly, Germany’s National Regulatory Control Council (NKR) states in its 2025 annual report that the government has, for the first time, achieved a clear decline in annual compliance costs. During the reporting period from June 2024 to July 2025, these costs fell by roughly EUR 3.2 billion overall. Nearly EUR 1 billion of those savings came from reduced business compliance costs. Even so, the overall burden remains too high: 64 billion euros in annual administrative expenditures and an additional 13.2 billion euros in compliance costs since 2011 paint a clear picture. To achieve a lasting turnaround in small government and state modernization, further core changes are needed.

Excess regulation and unnecessary complexity must be scrutinized to favor greater trust and liability over prescriptive provisions. We must continue to put the brakes on bureaucracy by developing from “one in, one out” to “one in, two out.” At the same time, we should abolish existing exceptions and set concrete net-reduction targets for areas such as mandatory reporting, documentation, and statistics. Entire areas of law and existing regulations as well as administrative procedures must be put under cross-departmental review, reimagined, and improved as a package.
To incorporate practical expertise and achieve the greatest possible reduction in bureaucracy will require consistent feedback across ministries from practitioners, citizens, businesses of all sizes, and digital actors. A cost–benefit analysis is a perfectly suitable assessment tool in this context. At present, that analysis shows an unbalanced ratio. The costs are too high and outweigh the benefits. A more balanced ratio requires, among other things, a ban on gold-plating — the practice of applying stricter standards when converting EU directives into domestic law — as well as broader standardization, more room for experimentation, and requirements focused on outcomes rather than procedures. Above all, this demands political courage, clearly defined goals, and a high pace at every level so that these bureaucratic relief measures become tangible in practice and deliver competitiveness at zero cost.
Simple State – Chapter 2

Germany’s public administration faces an enormous challenge: Overly complex rules and insufficient digitization lead to overly complex procedures, while a steadily growing workload causes backlogs and delays. The sheer number of audits, documentary requirements, and coordination duties is now almost impossible for both authorities and project developers to manage. The results are lengthy procedures, legal uncertainty, and a noticeable throttling of urgent projects in industry, infrastructure, and energy.
The causes lie not only in procedural law but above all in substantive law. Over the years, a standard of entitlement has emerged that promises the highest standards across all specialized fields, regardless of whether those requirements are relevant to the administrative decision or make any material contribution to environmental or health protection. Instead of prioritizing or streamlining, these requirements are routinely processed by rote, leading to complexity that is barely manageable. The result: duplicate audits, extensive environmental reviews with thousands of pages of documentation, recurring calls for public comment, and intense judicial scrutiny.

Laws adopted so far to promote accelerated planning have had little impact. They mainly address procedural law, but the main causes of lengthy procedures lie in substantive law. Another critical area is environmental law, which has become increasingly complex over the course of several decades. Paradoxically, a wind turbine project cannot proceed quickly or without red tape, even where it is certain in advance that no strictly protected species will be harmed.
By contrast, the recent switch to LNG projects and alternative fuels shows what is possible when the political will is strong enough: New procedures can be implemented at unprecedented speed. However, for a broad-based acceleration to endure, emergency legislation is not enough; a fundamental change of course is needed. In other words, we urgently need to simplify. We need to systematically reduce duplicate audits, fully digitize[AB8.1] our procedures, limit the scope of review to realistic levels, and consolidate tasks wherever the efficiently gains are most pronounced.
Only then can investments accelerate, innovation expand, and administration regain its ability to act. Responsibility lies with the legislature: a major breakthrough requires tackling the core problem through practical, trust-based legislation that enables acceleration without jeopardizing core principles of environmental protection and the rule of law[AB9.1]. Political mistrust of business must give way to trust that defines goals but does not prescribe the path and allows for responsible self-governance. Freedom does not mean being administered into passivity. Companies must be allowed to take the initiative. We need better legislative processes that produce trust-based rules.
Simple State – Chapter 3

The digital transformation of public administration is underway but lags expectations. Of a total of 579 administrative services, some 349 are currently available online, 165 of them nationwide across all municipalities. Meanwhile, 230 services under the Online Access Act (Onlinezugangsgesetz or OZG) have not been digitized at all yet. High-demand processes such as parental allowance (Elterngeld) or marriage registration are partially available online, but usage rates remain low: Only 13 percent of citizens have so far applied for an administrative service through digital channels. Most people want to see faster progress: 90 percent would like digitization to move more quickly, and two-thirds support stronger federal powers to accelerate its implementation throughout the federal system.
The government has long recognized the need for a modern, digital, citizen-friendly administration, but its implementation has so far come up short: Slow processes, high bureaucratic costs, and the sluggish pace of digitization are jeopardizing our competitiveness as an industrial location and undermining civic trust in the efficacy of government action. Half of all citizens say that poor or missing digital services from public authorities make them question how modern and capable the state really is. The government must therefore live up to the standards citizens have grown accustomed to in the digital world, or else it will lose even more trust and legitimacy. Companies are power users of public administration: They interact daily with a wide range of services, from permits and subsidies to reporting forms. For them, the efficient administration of reliably digital public services is a decisive factor in choosing a location.

Germany needs an industry-focused administration that is itself fully digitalized[AB10.1], one that meets both the needs of business and the expectations of citizens. That is the only way for the state to ensure it remains a capable and reliable partner in times of crisis and in international competition. The federal government has presented its 2025 modernization agenda as a concrete action plan to address these challenges. It aims to become a responsive, digitally capable government able to cut red tape, streamline processes, and significantly improve the quality of service.
The agenda covers five central fields of action, from tangible reductions in paperwork to improved lawmaking, efficient personnel development, and administrative modernization. Key projects deliver visible progress that citizens and businesses can experience directly in everyday life, including expedited construction approvals, digital vehicle registration, and company formation around the clock.
In addition, the IT Planning Council’s federal digital strategy provides a strategic framework for the digital transformation of public administration across all federal levels. It defines a shared vision for the future, sets binding guidelines, and translates them into five priority topics ranging from digital infrastructure and applications to data use and information security. The goal is a more efficient, crisis-resilient, and trustworthy administration that derives its strength from division of labor, common standards, and user-centered services. The federal digital strategy thus complements the modernization agenda with urgently needed coordination and governance in a multi-tiered federal system.



