Report shows Germany lacks digital strategy

PUBLICATION Report shows Germany lacks digital strategy

The European Center for Digital Competitiveness published its new Digitalreport, which shows the country is still progressing far too slowly when it comes to digitisation and AI, and that hopes for improvement are limited.

Germany is still making far too slow progress with digitalisation and hopes for improvement are limited: Neither business and political leaders nor the population expect any major progress in the next few years. The situation in digital future technologies is precarious: 95% of executives believe that Germany is lagging behind in terms of digitalisation.

This is one of the findings of the Digitalreport 2024, which summarizes the country’s current digital state. Published this year for the fifth time by the European Center for Digital Competitiveness at ESCP Business School (Berlin campus) and the Allensbach Institute, it is based on a survey of a representative population and results from a study of around 500 top German business and politics executives.

Key findings

• Business and political leaders agree on Germany's digital deficit, calling for swift action.
• Clear strategy and streamlined responsibilities are essential, with a call for prioritizing greentech, AI, and regulatory ease.
• 69% emphasize the government's role in driving digital progress.
• Tight data protection regulations hinder progress, say 50% of citizens.

The overwhelming majority of the population believes that rapid progress in digitalisation is crucial for the future; 74% are also convinced that the future development of prosperity depends on the pace of digitalisation. However, only 23% of the population expect major progress to be made in this area over the next few years, with the majority expecting slow and limited progress at best.

The business and political representatives surveyed were similarly critical. Not only do 95% of them see a backlog in digitalisation, but the vast majority also see a backlog in AI. 74% believe that not only Germany but Europe as a whole is lagging behind in this area. The picture is completely different in the area of Greentech: 70% are convinced that Europe is well positioned in this area. 

“Germany should focus particularly on the areas of greentech and AI,” says Professor Philip Meissner, who is the Founder & Director of the European Center for Digital Competitiveness at ESCP Business School. “Germany can be a global leader in greentech, and we can't afford to lose in AI.” In addition, more speed is finally needed for basic digital services such as digital administration or digital infrastructure. According to Meissner, the expertise for this must be pooled at the federal level: “There are already excellent digital solutions in Europe in the area of GovTech. We can also use these quickly and comprehensively in Germany. We don't have to reinvent the wheel.” Deregulation should lead to companies being able to pick up speed again in the digital transformation.

“Germany must once again stand for world-leading solutions and not for the strictest regulations, especially when it comes to data protection,” summarizes Meissner.

Germany's federal government lacks a clear strategy

There is a broad consensus when analysing the causes of Germany's digital backlog: “Strategic deficits, the fragmentation of responsibilities and insufficient investment are named as the main reasons for the lack of progress,” says Professor Renate Köcher from the Allensbach Institute. Business and political leaders as well as the population agree with this assessment. Among the population, 65% attribute the delay in digitalisation to the lack of a clear strategy, 62% to the fragmentation of responsibilities between the federal, state and local governments and 55% to insufficient investment.

The population believes that the federal government is primarily responsible here: 69% of the population and 76% of those interested in politics are convinced that the federal government in particular could push ahead with digitalisation. This is followed at some distance by the state governments, business and the municipal level: 46% also see the state governments as responsible, 39% the municipalities and 41% the business community.