According to a study by the management consultancy Deloitte, Germany could become less competitive in the coming years. Among other things, digitization is decisive for further growth.

Management consultancy Deloitte sees German prosperity on the brink. Productivity growth in the economy has halved in the past decade compared to the previous decade – despite technical progress and automation.

This is particularly bad for an aging society with a declining workforce. «If it is not possible to reverse the negative productivity trend, the location will lose competitiveness. Growth and prosperity will suffer significantly,” warned the chief economist at Deloitte Germany, Alexander Börsch, in a study.

More working women, more digitization and more start-ups would be needed. “How the course is set in the coming years will determine the future prosperity of the country and the quality of life of future generations,” said Volker Krug, Germany boss of Deloitte. With the right policies, economic growth of 3.4 percent per year and an increase in gross domestic product by EUR 8,600 to EUR 51,600 per capita is possible by 2030.

More flexibility and comprehensive child care

A crucial lever is the labor market. Automation cannot compensate for the increasing shortage of skilled workers. But with flexible working hours and extensive childcare, more women could work full-time. A higher labor force participation rate among foreign and older citizens would also help.

Software investments and rapid broadband expansion are also decisive for growth and competitive locations. “Germany must tackle digitization more resolutely and increase the speed of implementation significantly,” said Krug. Otherwise “the lag in digital technologies will make itself felt, and the general competitiveness of our economy will suffer in the long term”.

New digital developments are increasingly taking place in start-ups. “However, structural and regulatory difficulties are slowing down young companies in this country. More venture capital investments and less administrative effort would result in a real growth boost,” says the Deloitte study.