COMMISSION STAFF WORKING DOCUMENT 2024 Country Report - Germany Accompanying the document Recommendation for a COUNCIL RECOMMENDATION on the economic, social, employment, structural and budgetary policies of Germany
Date: 2024-06-19
Institutions: European Commission, Secretariat-General
Subjects: Germany, budget policy, digital transformation, economic policy, economic recovery, economic reform, employment policy, green economy, social policy, stability pact

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 19.6.2024  SWD(2024) 605 final  COMMISSION STAFF WORKING DOCUMENT 2024 Country Report - Germany Accompanying the document Recommendation for a COUNCIL RECOMMENDATION on the economic, social, employment, structural and budgetary policies of Germany {COM(2024) 605 final} - {SWD(2024) 600 final}  
 
 
 
 
 
ECONOMIC AND EMPLOYMENT SNAPSHOT 

Germany’s economy is facing 
bleak growth prospects 

After  a  recession  in  2023,  Germany’s 
growth  prospects  remain  weak (1).  
In 
2023,  GDP  contracted  by  0.2%.  In  2024  and 
2025, Germany is expected to have the lowest 
GDP  growth  in  the  euro  area  at  0.1%  and 
1.0%,  respectively.  Fiscal  policy  conditions 
have tightened. Investment is also affected by 
the high interest rates and set to remain below 
pre-pandemic  values.  However,  consumer 
spending  is  likely  to  give  a  boost  to  the 
economy  as  households  are  expected  to 
benefit from real wage increases and see their 
purchasing  power  rise.  Given  signs  of  a 
recovery  in  global  economic  activity,  German 
exports  are  expected  to  recover  somewhat  in 
late  2024  but  to  rise  broadly  in  line  with 
imports (see Graph 1.1).  

Economic  output  has  returned to  its pre-
pandemic  level,  but  only  barely.  Germany 
stood above its Q4 2019 level in Q4 2023 by 
only 0.1%. This puts Germany’s recovery since 
the  COVID-19  pandemic  at  the  lower  end  of 
the scale of EU countries (Graph 1.2). In 2023, 
consumer  spending  and  investment  were  still 
below their pre-pandemic levels. 

Inflation continues to abate. It is projected 
to  reach  2.6%  in  2024  and  2.4%  in  2025, 
down from a peak of 11.6% in October 2022. 
This mainly reflects the wholesale price of gas 
and  electricity  decreasing  from  historic  highs. 
However,  the  phase-out  of  energy  measures 
to 
and  higher  fuel  costs  are  expected 
contribute  to  overall  inflation  in  2024  and 
2025. The main driver of inflation in 2024 and 

(1)  The cut-off date for the data used to prepare the 27 

Country Reports was 15 May 2024.  

increases  will  have  a 

2025  is  forecast  to  be  the  service  sector,  as 
temporary 
wage 
inflationary  effect.  After  significant  losses  in 
2022, real wages started to stabilise in 2023. 
Real wage growth is expected to accelerate as 
more  wage  negotiations  reflect  the  recent 
inflation peak. 

Graph 1.1: Components of GDP growth 

in per cent 
Source: Eurostat, European Commission 

significant 

The  labour  market  has  been  particularly 
robust  but  there  are  significant  labour 
shortages.  In  spite  of  limited  growth,  the 
German labour market has proven resilient. In 
2023,  the  unemployment  rate  remained  at 
3.1%, below the job vacancy rate of 4.0%, and 
well below the EU unemployment rate at 6.1%. 
However, 
regional  disparities 
remain in terms of unemployment (Annex 17). 
This  strong  performance  also  means  that 
labour shortages remain particularly high, and 
they  are  expected  to  persist  given  the 
accelerating  demographic  ageing.  The  high 
share  of  women  working  part-time  and  lower 
labour  market  outcomes  of  people  with  a 
migrant background are additional  constraints 
(Annex  14).  Hours  worked  per  person 
employed  are  among  the  lowest  in  the  EU  at 
1 342 hours, and they fell by a further 0.3% in 
2023.  Labour  taxation  continues  to  provide 
weak  incentives  to  increase  hours  worked 

2 

-5-4-3-2-10123416171819202122232425Priv. consumptionGov. consumptionInvestmentInventoriesNet exportsReal GDP growthforecast 
 
 
       
technologies 

(Annex  12).  High 
innovative 
energy prices have compounded the decline in 
the  industrial  base,  leading  to  a  substantial 
reduction 
in  output  from  energy-intensive 
industries. Overall, manufacturing is no longer 
driving  growth  as  it  used  to,  and  no  other 
sector seems to fully fill the gap. 

Graph 1.2: GDP in Q4 2023 compared to Q4 
2019 

(Annex  19).  As  labour  shortages  persist,  firms 
are  retaining  workers  even  if  they  are  in 
economic difficulty. From 2022 to June 2023, 
15-20%  of  German  companies  hoarded 
large  EU 
labour, 
economies (2).  Over  time,  significant  labour 
hoarding  may 
limit  the  capacity  of  the 
economy to adjust. 

the  highest  share 

in 

surplus 

current 

The 
has 
account 
rebounded  but  is  expected  to  remain 
below  the  pre-pandemic 
level.  Recent 
trends are assessed in the in-depth review for 
Germany (3).  The  current  account  surplus 
bounced  back  from  4.2%  of  GDP  in  2022  to 
5.9%  in  2023.  This  reflects  a  gap  between 
savings and investment, which is sustained by 
a  slow  recovery  of  private  investments  and 
consumption.  Yet,  it  is  not  expected  that  the 
current  account  would  increase  back  to  the 
pre-pandemic  peak  of  8.2%  of  GDP  in  2019. 
The  in-depth  review  also  shows  that  the 
tradeable  sector  is  retrenching,  and  external 
competitiveness is challenged, as reflected by 
a declining global export market share.  

External factors and structural 
vulnerabilities weigh on Germany’s 
competitiveness 

Source: Eurostat 

it 

from 

imports 

To  achieve  sustainable  growth, 
is 
crucial  to  move  ahead  with  the  green 
transition  and  decarbonise  the  economy. 
Germany  quickly  diversified  its  energy  supply 
away  from  Russian  gas  imports,  reducing  its 
gas  demand  between  August  2022  and 
January  2024  by  16%  (Annex  7),  while 
ensuring  security  of  supply.  The  country 
increased 
European 
Economic  Area  and  put  three  floating  storage 
regasification  units  into  operation.  Germany 
also plays an important role in both the supply 
of and demand for clean technologies. It is one 
of the leaders on eco-innovation and performs 
strongly  both  in  absolute  numbers  and  in  the 
share  of  green patents  (Annex  5).  However, in 
2022,  its  share  of  renewable  energy  in  gross 
final energy consumption - at 21% - was still 
below the EU average of 23% (Annex  7). Grid 
expansion  and  reinforcement  are  needed  to 

the 

Geopolitical  tensions,  high  energy  prices 
and  technological  shifts  have  affected 
Germany’s economy. In the past, Germany’s 
strong  industrial  base  was  a  major  driver  of 
economic  growth.  However,  the  share  of 
manufacturing in gross value added has fallen 
since 2016 (from 22.9% in 2016 to 20.8% in 
2023).  Germany  is  particularly  vulnerable  to 
geopolitical  developments  given  its  export-
industry  and  high  degree  of 
focused 
integration 
in  global  value  chains.  Some 
industries,  particularly  the  automotive  sector, 
have  struggled  to  shift  to  sustainable  and 

(2)  VoxEU, 2024, A new survey-based measure of labour 

hoarding in the EU, cepr.org. 

(3)  European Commission, 2024, In-Depth Review for 

Germany, SWD(2024) 101 final; economy-
finance.ec.europa.eu.  

3 

95100105110115120IEMTHRCYDKPLBGSILTROELLVNLPTBESEHUSKLUITESFRATEEDEFICZ 
 
      
integrate  additional  renewable  energy  and  to 

services  is  progressing  slower  than  in  other 

Box 1: 

Germany’s competitiveness in brief 

Germany maintains a high level of competitiveness driven by a diversified economy with a 
strong industrial base and dynamic small and medium-sized enterprises (Mittelstand). The level 
of  labour  productivity  is  high,  and  Germany  benefits  from  a  high  degree  of  trade  integration, 
especially  into  the  single  market.  Although  it  is  mostly  driven  by  large  firms,  Germany  still 
performs  well  on  innovation  in  comparison  with  its  EU  peers.  However,  competitiveness 
challenges remain: 

• 

• 

• 

shortages  of  skilled  labour  and  low  education  outcomes  limit  the  potential  for 
growth, hinder the green and digital transitions and are a bottleneck to investment; 

obstacles to investment such as a high administrative burden and lengthy planning 
and  permitting  procedures  are  barriers  to  progress  on  the  green  transition  and 
productivity-enhancing investments, particularly in research and innovation; 

the  slow  pace  of  digitalisation  of  the  public  administration  and  gaps  in  the 
digital infrastructure are a drag on productivity. 

give business greater planning predictability. 

Demographic  change  is  accelerating,  and 
the  lack  of  qualified  staff  is  the  number 
one  concern  voiced  by  companies.  The 
working  age  population  is  expected  to  decline 
more  in  Germany  than  in  other  EU  countries, 
with  the  population  aged  20-64  falling  from 
50  million  in  2023  to  46  million  by  2035 (4). 
Since  2015,  2.6  million  net  new  jobs  have 
been  created,  and  the  employment  of  foreign 
nationals has increased by  2.3 million. Still, in 
2023,  60.9%  of  people  aged  20-64  with  a 
non-EU  nationality  were 
in  employment, 
compared  to  83.8%  for  German  citizens. 
Germany  has  taken  steps  to  facilitate  the 
arrival and integration of skilled migrants. The 
Law  on 
further  development  of 
immigration  of  skilled  workers  entered  into 
force in three stages (November 2023, March 
2024,  June  2024),  reducing  the  earning 
threshold  and  facilitating  the  recognition  of 
foreign qualifications. 

the 

The  slow  pace  of  digitalisation,  limited 
administrative  capacity  and  worsening 
education  outcomes  are  additional  drags 
on future growth. The digitalisation of public 

(4)  European Commission, 2023, 2024 Ageing Report. 

Underlying Assumptions and Projection Methodologies, 
economy-finance.ec.europa.eu. 

through 

digitalisation. The 

Member States and there is still a high backlog 
in building digital infrastructure, despite recent 
progress  (Annex  10).  This  curbs  Germany's 
competitiveness  as  a  business  location  and 
limits  companies'  ability  to  make  productivity 
gains 
digital 
transition  is  also  limited  by  a  shortage  of 
skills,  particularly  in  profiles  relevant  for  the 
green  and  digital  transitions.  In  addition  to 
demographic change, low education outcomes 
and  a  high  share  of  young  people  leaving 
school  early  are  other  factors  that  aggravate 
labour  shortages,  undermining  productivity 
and growth (Annex 15). 

These  structural  challenges  are  reducing 
Germany’s overall competitiveness. In the 
global  competitiveness  ranking  produced  by 
the  International  Institute  for  Management 
Development,  Germany  fell  from  6th  to  22nd 
place  in  less  than  a  decade.  It  ranked  even 
lower  on  aspects  such  as  tax  policy,  prices, 
attitudes  and  values  and  on  basic  and 
technological infrastructure (Annex 12). 

Germany  performs  relatively  well  on 
implementing  the  European  Pillar  of 
Social  Rights,  but  challenges  persist  in 
terms of equality in education and access 
to  training,  employment  and  housing 
(Annex 14). Almost 1 out of 4 children were at 
risk  of  poverty  or  social  exclusion  in  2022, 
putting Germany far behind its national target 

4 

 
 
 
of  reducing  the  number  of  children  living  in 
(quasi-)jobless  households  by  300 000  until 
2030.  Socio-economic  background  has  a 
strong  impact  on  education  outcomes  and 
integration.  The  share  of 
labour  market 

borrowing  at  Länder  level (5).  Until  2020,  the 
debt  brake  was  in  a  phasing-in  period.  In 
response  to  the  COVID-19  pandemic  and  the 
energy  crisis,  the  government  activated  the 
in  2020  and 
national  emergency  clause 

Box 2: 

UN Sustainable Development Goals (SDGs) 

Germany  performs  above  the  EU  average  and  is  further  improving  on  most  SDGs 
related to productivity (SDGs 8 and 9) but needs to catch up with the EU average on 
quality  education  (SDG 4).  Germany  has  a  robust  labour market  with  high  employment,  low 
levels  of  long-term  unemployment  and  a  declining  number  of  young  people  not  in  education, 
employment or training (NEETs). Although Germany’s investment share of GDP is slightly below 
the EU average, it has some of the highest R&D spending in the EU. Germany is below the EU 
average and moving further away on SDG 4 (quality education), which hampers economic growth 
and  competitiveness.  Worsening  education  outcomes,  a  high  number  of  young  people  leaving 
school early and weak basic digital skills risk exacerbating the skills shortages (Annex 1). 

Out  of  the 17  indicators,  5  SDGs  remain  below  the  EU  average.  These  relate  to  quality 
education (SDG 4), environmental sustainability (SDG 13) and fairness (SDGs 5, 7 and 10). 

children below the age of 3 enrolled in formal 
childcare is below the EU average, hampering 

full-time  employment  of  women  and  equal 
opportunities  for  children. The  share  of young 
people  leaving  school  early,  is  high  and  now 
exceeds  the  EU  average.  The  level  of  digital 
skills  remains  below  the  EU  average.  Despite 
house  prices  falling  from  their  peak  in  2022, 
housing  affordability  has  not  improved  as 
rents  and  interest  rates  have  increased.  The 
share  of  people  living  in  households  with 
housing  costs  above  40%  of  their  disposable 
income increased to 11.9% in 2022, above the 
EU average of 8.7% (Annex 12 and 14). 

The debt brake will lead to further 
fiscal consolidation, while public 
investment remains constrained  

2024 is the first year where the national 
debt brake will be fully applicable since it 
was  created in  2009.  The  debt  brake  limits 
new  borrowing  from  the  federal  government 
to  0.35%  of  GDP  and  it  prohibits  any  new 

suspended national fiscal rules until 2024. Full 
reactivation  of  the  debt brake  requires  strong 
consolidation  of  government  finances  and 
limits the government's ability to make public 
investments and other productive spending. 

court 

constrains 

its  available 

At  the  same  time,  a  ruling  issued  by  the 
constitutional 
the 
available fiscal space by limiting the use 
of  extra-budgetary  funds.  When 
the 
emergency clause was activated from 2020 to 
2023,  the  German  government  sought  to 
increase 
fiscal  space  by 
repurposing  credit  authorisations  and  using 
(“special  purpose 
extra-budgetary 
vehicles”).  On  15 November  2023, 
the 
constitutional  court  annulled  such  practices, 
arguing that they circumvented the fiscal rules 
of the debt brake. This further limits the scope 
for  government  spending, 
including  public 
investments.  

funds 

In recent years, new needs have required 
additional 
funding.  Since  2020,  over 
EUR 100  billion  have  been  transferred  yearly 
from  the  federal  budget  to  the  pension 
system,  constituting  around  23%  of  the 

(5)  For details on the debt brake see: Bundesministerium 

der Finanzen (BMF), 2022, Kompendium zur 
Schuldenregel des Bundes, bundesfinanzministerium.de. 

5 

 
 
 
federal  budget  and  around  32%  of  pension 
expenditure 
the 
government created  an  EUR 100  billion  extra-
budgetary fund to increase defence spending. 

in  2022 (6). 

In  2022, 

investment 

Overall,  public 
remains 
constrained  in  Germany.  It  has  been  below 
the  EU  average  for  the  past  two  decades. 
From  2000  to  2022,  Germany  had  a  public 
investment  ratio  of  2.2%  of  GDP  against  the 
EU  average  of  3.2%.  Combined  with  recent 
difficulties  in  raising  private  investment,  this 
impact  on  the 
long-lasting 
may  have  a 
country's growth prospects.  

(6)  Bundesministerium für Arbeit und Soziales (BMAS), 
2023, Rentenversicherungsbericht 2023, bmas.de. 

6 

 
 
IMPLEMENTATION OF KEY REFORMS AND 
INVESTMENTS USING EU INSTRUMENTS 

Funding from the Recovery and Resilience 
Facility (RRF) and cohesion policy funding 
is mutually reinforcing Germany's efforts 
to  boost  its  competitiveness  and  foster 
In  addition  to  the 
sustainable  growth. 
EUR 28  billion  of  RRF  funding  (Annex  3), 
cohesion  policy  provides  Germany  with 
EUR 19.9  billion  for  the  2021-2027  period. 
Combined support from these two instruments 
is  equivalent  to  around  1.2%  of  GDP,  against 
the EU average of 5.4% of GDP (Annex 4). 

Under  its  recovery  and  resilience  plan 
(RRP),  Germany  has  launched  important 
policy  measures  that  are  expected  to 
boost  the  country’s  competitiveness.  In 
particular,  the  RRP  includes  measures  to  ease 
the  bottlenecks  to  investment,  modernise  the 
public  administration,  support  the  green  and 
improve  on 
digital  transition  as  well  as 
education  and  skills.  However,  given  the 
limited  size  of  the  RRP,  further  action  is 
needed  to  tackle  key  challenges  and  boost 
competitiveness (Section 3). 

one 

payment 

Germany 

delayed. 

The  implementation  of  Germany’s  RRP  is 
significantly 
has 
request, 
submitted 
corresponding to 36 milestones and targets in 
the  plan  and 
in  an  overall 
resulting 
disbursement of EUR 4 billion on 28 December 
2023  (see  Annex  3).  Challenges  concern  the 
allocation  of  sufficient  resources  to  the 
management of the RRP. 

Cohesion  funding  helps  tackle  Germany’s 
growth  and  competitiveness  challenges 
and  reduce  the  country’s  territorial  and 
social  disparities.  Under  the  2014-2020 
programming  period,  support  focused  on  the 
areas  of  research  and  innovation,  renewable 
energy  and  social  cohesion.  For  the  2021-
2027 programming period, support focuses on 
these same areas and on improving living and 
working conditions. The priorities set out in the 

7 

European  Regional  Development  Fund  (ERDF) 
and  European  Social  Funds  Plus  (ESF+)  2022 
programmes remain valid (Annex 17). 

Easing investment bottlenecks   

the 

help 

tackle 

Germany's  RRP  contains  measures  that 
will 
regulatory 
bottlenecks  to  investment.  The  reforms  in 
the  RRP  are  important  steps  to  accelerate 
planning  and  approval  procedures 
for 
transport  and  to  help  municipalities  make 
further  investments.  Progress  on  the  planned 
initiatives  and  additional  action  to  lower  the 
barriers to  investment  could  help  improve  the 
overall  framework  for  private  and  public 
investment,  including  swift  and  effective  use 
of both EU and national funds (see Section 3). 

Unlocking green investments  

Germany  has  taken  steps  to  decarbonise 
its  economy  and  industry.  Under  its  RRP, 
Germany  is  investing  in  the  green  hydrogen 
value  chain to  help decarbonise the economy. 
The RRP contributes to accelerating the market 
important  projects  of 
the 
uptake  under 
common  European 
initiative.  To 
interest 
complement this, the ERDF provides support to 
two hydrogen model regions (Annex 4). 

that 

investments 

Under  the  RRP,  Germany  has  started 
making 
promote 
climate-friendly  transport.  The  RRP  has 
provided  financial  support  to  businesses  and 
individuals  to  buy  240 000  electric  or  low-
emission  cars.  The 
roll-out  of  charging 
infrastructure  has  started.  The  investment 
framework  supporting 
low-
emission buses has also been adopted. 

the  shift 

to 

 
 
support 

to  make 

With  the  help  of  RRF  funding,  residents 
receive 
energy-
efficiency  renovations.  The  RRP  finances  a 
large-scale renovation programme to increase 
the  energy  efficiency  of  residential  buildings, 
while  complementary  support  is  provided  by 
the  EDRF  for  the  energy  renovation  of  public 
and  social 
infrastructure,  businesses  and 
research institutes. 

Supporting the digital transition 

The RRP is helping Germany invest in the 
digitalisation  of  its  public  services.  It 
supports  a  national  reform 
to  digitalise 
administrative  services.  70  public  services 
have  been  made  available  online  under  these 
total,  businesses  and 
RRP  measures. 
individuals will benefit from full digital use of 
100  of  the  most  important  Länder  services 
and 115 federal services. 

In 

investments. 

It 
microelectronics 

The  RRP  also  supports  strategic  cross-
funds 
border  digital 
and 
in 
investment 
communication technologies, contributing to a 
large-scale cross-border European initiative to 
improve  the  EU’s  capabilities  in  electronics 
design. The RRP is contributing to a large-scale 
European  initiative  to  foster  the  industrial 
deployment of smart cloud and edge solutions. 

Investing in people for economic 
growth and social resilience 

The  RRP  supported  research into  and the 
development  of  vaccines  against  COVID-
19.  This  contributed  to  the  development  and 

roll-out  of  the  successful  BioNTech  vaccine. 
Germany  supplied  165  million  BioNTech 
vaccine doses, more than 70% of all supplied 
vaccines.  Worldwide,  3  billion  doses  of  the 
BioNTech vaccine were produced in 2020. 

its  health  system.  Under 

Germany is investing in the digitalisation 
of 
its  RRP, 
Germany  is  modernising  hospitals  and  local 
health administrations to improve their digital 
infrastructure,  emergency  capacities, 
tele-
medicine,  robotics  and  IT  and  cyber  security. 
This  complements  ERDF  programmes  by 
supporting  e-health  services  to  reduce  the 
regional differences in access to healthcare. 

using 

action 

EU 
Complementary 
instruments  improving  early  childhood 
education and care (ECEC) and whole-day 
schooling. Under its RRP, Germany is creating 
90 000 additional ECEC places by building new 
facilities  and  refurbishing  existing  ones.  To 
complement  this, Germany’s  ESF+  operational 
programmes  fund  training  for  childcare  staff 
and increase the supply of whole-day schools. 

Germany  is  implementing  reforms  and 
investments  enhancing  digital  teaching 
and  learning.  Under  its  RRP,  to  facilitate 
digital 
is  equipping 
teachers  with  mobile  digital  devices  and 
providing  scientific  content  for  centres  of 
competence in digital education. 

teaching,  Germany 

EU funds provide support to young people 
entering  the  labour market.  Under  its  RRP, 
Germany  has  provided  financial  support  to 
keep  at 
in 
employment. To complement this action, ESF+ 
programmes  support  young  people  with  a 
migrant background to develop skills and take 
up apprenticeships. 

least  70 000  apprentices 

Box 3: 

Combined action for more impactful EU funds 

To  boost  economic  growth  and  maximise  the  impact  of  EU  funding,  Germany’s  RRP  includes 
reforms that support investments under other EU instruments, creating important synergies and 
complementarities  between  action  under  the  different  funds.  For  example,  to  reduce  CO2 
emissions  in  the  transport  sector,  Germany’s  RRP  promotes  the  purchase  of  purely  electric 
vehicles by providing a ten-year tax exemption. Germany is combining this RRP reform with ERDF 
and  RRF-funded  investment  in  sustainable  interconnected  transport  solutions  to  link  different 
modes of transport seamlessly. This will increase the joint impact of the various measures. 

8 

 
 
FURTHER PRIORITIES AHEAD 

public 

investment 

the  digital 

Germany’s economic model faces multiple 
challenges related to obstacles to private 
investment  such  as  high  administrative 
burden, 
needs, 
digitising  the  public  administration  and 
infrastructure. 
improving 
Tackling  skills  and  labour  shortages,  keeping 
up the momentum on the green transition and 
modernising  the  pension  system  are  also 
urgent priorities. Achieving growth that is more 
inclusive,  sustainable  and  competitive  will 
require reassessing the tax mix. Tackling these 
challenges  will  help  boost  Germany’s  long-
term 
the 
resilience  of  its  economy.  It  will  also  help 
make  further  progress  in  achieving  the  UN 
Sustainable Development Goals. 

competitiveness  and 

ensure 

is 

important  that  the 

It 
identified 
challenges  are  addressed  both  at  the 
national  and  regional  level  to  reduce 
regional 
the 
administrative  and  investment  capacity  in  a 
balanced way across the country. 

disparities 

improve 

and 

Enhancing public investment and 
removing obstacles to private 
investment are key to boosting 
competitiveness 

Low potential growth also reflects a lack 
of  investment.  Germany  is  forecast  to  have 
the lowest potential for growth in the EU in the 
coming  years  (Graph  3.1),  at  0.8%.  The 
projected  decline 
the  working  age 
in 
population  will  be  a  significant  drag  even  if 
further  measures  are  taken  to  increase  the 
labour  supply.  So  far,  investments  have  not 
been  enough  to  offset  the  reduction  in  the 

workforce  by  raising  productivity  growth  and 
building up capital (7). 

Graph 3.1: Estimated average yearly potential 
growth, 2023-2028 

Source: Commission spring forecast 2024 

Obstacles  to  private  investment  persist. 
The  main  barriers  to  investment  reported  by 
firms are the availability of skilled staff (92%), 
energy costs (89%) and uncertainty about the 
future  (77%).  Firms  in  Germany  report  more 
often  than  the  EU  average  that  business 
regulations  (69%)  and  the  lack  of  digital 
infrastructure 
to 
investment (8). In a survey from 2023, 92% of 
they  perceived  a 
firms 
substantial increase in the bureaucratic burden 
in  recent  years  and  as  a  result,  58%  plan  to 

reported 

barriers 

(52%) 

that 

are 

(7)  Higher public and private investment spending would 
also help to address the investment-savings-gap as 
outlined further above. 

(8)  European Investment Bank (EIB), 2023, EIB Investment 

Survey 2023: European Union Overview, eib.org. 

9 

01234MTIEHRCYSIROPLBGHULTSKUSLUPTESSENLLVBECZDKUKELITATEEFRFIDE 
 
   
 
concentrated  in  the  automotive  sector (14). 
Moreover,  SMEs’  share  of  business  R&D 
expenditure  is  very  low  (0.20%  in  2021 
against  the  EU  average  of  0.38%),  with  no 
growth over the last decade (Annex 11). 

Graph 3.2: Net investment by government level 

to 

for 

the 

incentives 

avoid  investing  in  Germany  in  the  future (9). 
The  federal  government  has  taken  several 
measures 
business 
improve 
environment  by  reducing  bureaucracy  and 
investment.  For 
providing 
example,  the Growth  Opportunities  Act  entails 
greater  scope 
loss 
offsetting (Annex  19).  However, the volume is 
small (EUR 3.2 billion or 0.1% of GDP), and the 
administrative  simplifications  only  provide 
marginal  relief  to  specific  sectors (10).  Easing 
the business regulations that restrict access to 
certain  services  and  professions  could  help 
unlock 
boost 
competition (Annex 12). 

for  depreciation  or 

productivity 

gains 

and 

investment  has 

lagged  behind 
Public 
investment  needs.  The  public  investment 
needs  regarding  infrastructure,  education  and 
training  as  well  as  for  the  twin  transition  are 
large,  with  the  investment  gap  for  the  next 
decade  estimated  to  be  at  least  EUR  600 
billion  (14%  of  2024  GDP) (11).  Investment  at 
federal level was below depreciation last year. 
At  municipal  level  (about  40%  of  public 
investment), net investment has been negative 
continuously,  resulting  in  a  decrease  in  the 
capital stock (12) (Graph 3.2). This is also due to 
differences  and  fluctuations  in  the  financial 
situations of municipalities and Länder (13). 

research 

Spending on research and development is 
stagnating.  Germany’s 
R&D 
intensity  is  at  a  high  level  but  static  and  it  is 
below the national target (2022: 3.1% against 
the target of 3.5% for 2025). R&D output has 
fallen  when  measured  as  a  share  of  most 
cited  publications  and  patent  applications. 
remains 
Private-sector  spending  on  R&D 

(9)  Institut für Mittelstandsforschung (IfM), 2023, Analyse 
zur Bürokratiebelastung in Deutschland, ifm-bonn.org. 

(10)  IW Köln, 2024, Wachstumschancengesetz: Investitionen 
fallen nur sechs Milliarden Euro höher aus, iwkoeln.de. 

(11)  According to an estimation by IW Köln and IMK, these 
areas require an additional EUR 600 billion of public 
investment or subsidies over the next decade; see also: 
IW Köln., 2024, 600 Milliarden Euro für eine 
zukunftsfähige Wirtschaft, iwkoeln.de. 

Source: Destatis 

is  declining,  partly  due 

Low  business  dynamism  and  the  lack  of 
financing options for start-ups and scale-
ups may hinder the modernisation of the 
economy.  Firm  birth  rates  in  Germany  are 
below  the  EU  average  (Annex  11),  and  self-
to 
employment 
bureaucratic  hurdles.  For  example,  it  takes  a 
new  firm  122  days  to  obtain  an  operating 
licence,  almost  four  times  the  average  for  all 
economies (15).  The  share  of  high-growth 
businesses  in  Germany 
is  below  the  EU 
average and falling. Although overall financing 
may  not  be  a  major  concern,  financing  for 
start-ups and scale-ups seems to be limited by 
comparatively low levels of growth- and late-
stage  venture  capital  (Annex  11).  As  the 
largest  EU  economy,  Germany  would  benefit 
from deeper European capital markets. 

Institutional  investors  mostly  invest  in 
low-risk,  low-yield  assets.  In  general,  they 
play an important role in financing investment 

(12)  KfW Research, 2023, KfW-Kommunalpanel, kfw.de. 

(14)  Stifterverband, 2023, Analyse – Forschung und 

(13)  Bertelsmann Stiftung, 2023, Kommunaler Finanzreport 

Entwicklung in der Wirtschaft 2021, stifterverband.org. 

2023, bertelsmann-stiftung.de. 

(15)  World Bank, enterprisesurveys.org. 

10 

-0.4-0.3-0.2-0.10.00.10.20.30.4000204060810121416182022% of GDPFederalStateLocalTotal 
 
   
 
pension 

and  innovation  as  they  have  the  capacity  to 
large  sums  and  bear  the  risks 
mobilise 
institutional 
involved.  However,  German 
investors 
funds 
as 
such 
(Pensionskassen and Pensionsfonds) stand out 
in  an  international  comparison  for  their  risk 
aversion  with  a  low  share  of  investments  in 
private  equity (16).  Regulations  on  portfolio 
the 
such 
management 
differences between the Länder may limit the 
amount  of  exposure  to  high-yielding  asset 
classes.  Overall,  strengthening  the  role  of 
investors  as  capital  providers 
institutional 
could  help  deepen  capital  markets  and 
improve efficiency and investment growth. 

funds  and 

in 

High interest rates and construction costs 
are  a  drag  on  housing 
investments. 
Investment  in  housing  construction  has  fallen 
for  the  last  3  years  as  financing  conditions 
deteriorated  and  construction  costs  increased 
(Annex  12).  Even  before  then,  the  number  of 
dwellings  completed  was  considerably  below 
the  government  target  of  400 000  (the  peak 
in 2020 was 306 000). Demanding regulatory 
standards, 
regulatory  differences  across 
Länder, lengthy permitting procedures and the 
lack of digitalisation are barriers to expanding 
supply.  The  gap  between  housing  supply  and 
demand has widened and is now estimated at 
up  to  800 000  dwellings (17),  exacerbating 
housing affordability challenges (Annex 14). 

Further digitising and streamlining 
the public administration is key to 
unlocking the growth potential 

The slow pace of digital transformation is 
a challenge to the competitiveness of the 
economy.  The  rate  of  digitalisation  of  firms 
in  2023 (18).  Progress  on  digital 
stalled 
infrastructure,  digital  skills  and  digital  public 
administration  is  an  important  prerequisite  to 

(16)  EIOPA Insurance Statistics, eiopa.europa.eu. 

(17)  Pestel-Institut, 2024, Bauen und Wohnen 2024 in 

Deutschland, mieterbund.de. 

reducing the bureaucratic burden on firms and 
boosting  the  use  of  digital  technologies  to 
stimulate productivity growth (Annex 12). 

Fibre  coverage  and  very  high-capacity 
network  (VHCN)  coverage  in  rural  areas 
remain  key  challenges,  particularly  for 
SMEs. Despite improvements, Germany is still 
below the EU average for VHCN in rural areas 
(37.6% in Germany against the EU average of 
55.6%).  Total  fibre  coverage  is  increasing 
(29.8%)  but is  still  considerably  below the  EU 
average  of  64.0%  (Annex  10).  The  risk  of  a 
deepening  digital  divide  between  rural  and 
urban  areas  persists.  The  increase  in  federal 
funding 
and 
implementing  the  2022  gigabit  strategy  have 
the  potential  to  remedy  these  issues,  though 
expansion is slowed by the limited capacity of 
local  administration  to  grant  the  related 
permits. 

connections 

fibre 

for 

including  electronic 

The  lack  of  digital  public  services  is  a 
the  business  environment. 
drag  on 
Germany's  RRP  contains  several  measures  to 
support  the  implementation  of  digital  public 
services, 
identification 
systems,  and  modernising  registers,  but  the 
German  National  Regulatory  Control  Council 
considers  that  the  country  is  not  close  to 
achieving its target of digitalising all essential 
public  services  nationwide (19).  The  recent  cut 
to public funding for the digital transformation 
of public administration may create additional 
delays. 

intelligence 

leveraging  artificial 

Digitalisation  needs  to  go  hand  in  hand 
with  changes  to  internal  processes  and 
systems  in  public  administration.  This 
includes streamlining electronic record keeping 
and 
to 
automate  tasks.  The  seamless  integration  of 
digital  platforms  while  maintaining  data 
security  and  accessibility  poses  a  significant 
challenge.  The  federal  state  structure  adds 
complexity, resulting in a multitude of systems 
that are not interoperable. There is a need for 
continued coordination and cooperation across 
all  administrative  levels  and  more  ownership 

(18)  Bundesministerium für Wirtschaft und Klimaschutz 
(BMWK), 2023, Digitalisierungsindex, de.digital. 

(19)  Nationaler Normenkontrollrat, 2023, Stellungnahme des 

Normenkontrollrates, normenkontrollrat.bund.de. 

11 

 
 
 
when  delivering  digitalised  processes.  Further 
legal adjustments may be needed to ensure IT 
solutions  can  be  centrally  developed  for 
nationwide  roll-out.  Rapid  implementation  of 
the once-only technical system will reduce the 
administrative burden for firms (Annex 12). 

down  to  only  1.6%  in  2022.  Both  energy  and 
transport  taxes  are  below  the  EU  average 
(Annex  19).  The  levy  on  diesel  and  petrol,  in 
eurocent  per  litre,  has  been  unchanged  since 
2003,  but  the  introduction  of  the  new  CO2 
price  and  its  increase  in  2024  have  raised 
prices noticeably. 

Improving the tax mix is key to a 
more inclusive, sustainable and 
competitive growth 

(Annex  14).  Mitigating 

The  tax  and  benefit  system  still  creates 
disincentives 
to  work  more  hours, 
affecting  the  labour  supply.  Workers  in 
Germany  face  the  second  highest  level  of 
taxes  and  social  security  contributions  on 
earnings in the EU (Annex 19). In combination 
with  the  transfer  system,  this  reduces  the 
incentive  to  increase  ours  worked,  especially 
low-wage  and  second  earners,  often 
for 
the  high 
women 
marginal  effective  tax  rates  by  merging 
benefits and adopting a uniform marginal  tax 
rate  avoiding  sudden  hikes  in  the  tax  rate 
labour  supply  and  provide 
could  improve 
budgetary revenue (20). Although Germany has 
taken  action  to  improve  incentives  for  second 
earners, 
is 
maintained  for  the  moment.  The  already 
existing  alternative  (Faktorverfahren)  is  used 
less  than  1%  of  eligible  couples (21). 
by 
Reforming  the  marital  tax-splitting  system 
the 
(Ehegattensplitting) 
incentives  to  work  and  increase  employment 
by up to 185 000 full-time equivalents (22). 

combination 

improve 

could 

III/V 

the 

tax 

below 

Germany’s  share  of  environmental  taxes 
is 
Total 
environmental  taxation  is  on  a  downward 
trend since it peaked at 2.6% of GDP in 2003, 

EU  average. 

the 

is 

tax 

rate 

effective 

Corporate taxes play a role in Germany’s 
attractiveness  as  a  business  location. 
Germany  has  one  of  the  highest  corporate 
income tax rates in the EU, including the local 
trade  tax  (Gewerbesteuer),  at  29.9% (23).  The 
average 
also 
comparatively  high  at  27.0% in  2022  (EU 
average:  19.4%  (Annex  18).  Corporate  tax  in 
combination with the trade tax form a complex 
and untransparent tax system. Tax compliance 
costs are among the highest in the EU (24). The 
recently 
introduced  option  for  partnership 
companies  (Personengesellschaft)  to  be  taxed 
like capital companies is an improvement as it 
eliminates the difference in effective taxation, 
rates.  Recent 
especially 
initiatives  to  review  the tax  depreciation  rules 
and 
increase  R&D  tax  credits  are  cost-
effective ways of providing more incentives to 
invest,  and  experts  suggest  expanding  them 
further (25). At the same time, there is potential 
to  simplify  the  corporate  tax  system  by 
reducing the scope for exemptions. 

for  higher 

tax 

to  strengthen 

To  tackle  the  fiscal  challenges,  efforts 
could  be  made 
the 
Independent  Fiscal  Institution  (IFI).  The 
German  IFI,  an  advisory  board,  has  a  narrow 
mandate  and  needs  additional  funding.  The 
policy  dialogue  with  the  government  and 
parliament  could  be  improved  by  grounding  it 
in  law.  There  is  also  scope  to  improve  access 
to information. 

(20)  Blömer and Peichl, 2023, Reformoptionen im deutschen 
Grundsicherungs- und Transfersystem sowie bei der 
Ehegattenbesteuerung, svr-wirtschaft.de. 

(21)  Bundesrechnungshof, 2021, Bemerkungen 2020 zur 
Haushalts- und Wirtschaftsführung des Bundes, 
bundesrechnungshof.de. 

(23)  Only Portugal has a higher rate (31.5%). See: OECD, 

2023, OECD Tax Database: Table II.1., stats.oecd.org. 

(24)  EU Commission, Tax compliance costs for SMEs, 2022, 

op.europa.eu. 

(22)  German Council of Economic Experts, 2023, Annual 

(25)  IW Köln, 2024, Der Effekt der Sofortabschreibungen auf 

Report 2023/2024, svr-wirtschaft.de. 

die Attraktivität des Steuerstandorts, iwkoeln.de. 

12 

 
 
 
 
are  also  fewer  people  with  at  least  basic 
digital skills than the EU average (DE: 52% vs. 
EU  55%  in  2023).  Ongoing  reforms  of  skilled 
immigration  may  alleviate  the  shortage  of 
skilled  workers  to  a  certain  degree.  At  the 
same time,  companies  lacking  skills  and  staff 
may be considering investing in IT automation. 

for 

results  of 

International 

The  deterioration  in  the  level  of  basic 
skills is an increasing concern. According to 
the  PISA  survey 
the 
latest 
(Programme 
Student 
Assessment, 2022), around 3 out of 10 young 
students in Germany  lack a minimum level of 
proficiency  in  mathematics,  and  1  in  4  in 
reading  and science.  This is  nearly  double  the 
share in 2012. The decline in the mean scores 
for  maths  and  reading  between  2018  and 
2022  alone  is  about  the  same  size  as  the 
typical  gain  students  make  over  an  entire 
school year. 

socio-economic 

The 
and  migration 
backgrounds  of  students  have  a  rising 
influence  on  their  educational  outcomes. 
The  rate  of  under-achievement 
increased 
especially among students with disadvantaged 
and  migrant  backgrounds,  posing  a  challenge 
for  equal  opportunities  and  intergenerational 
mobility. In 2022, about half of students with 
a  disadvantaged  background  did  not  reach 
minimum  proficiency  in  mathematics  in  the 
PISA  survey  (up  to  46.6%  from  32.6%  in 
2012). Between 2012 and 2022, the share of 
foreign-born  students  among  15-year-old 
students  doubled  to  26%.  About  2  out  of  3 
foreign-born  students  achieve  low  scores  in 
mathematics (64% against 21.9% of German-
born  students),  amongst  the  highest  rates  in 
the  EU.  Germany  also  has  one  of  the  highest 
rates  of  young  people  leaving  school  early  in 
the EU (12.2% against the EU average of 9.6% 
in 2022). The rate is particularly high for non-
EU-born  students  (29.4%)  and  for  young 
people with low-educated parents (29). The new 
ten-year  federal  programme  ‘Startchancen’ 
targeting  mainly  disadvantaged  students  is 
expected  to  start  in  the  2024-2025  school 

(29)  European Commission, 2023, Education and Training 

Monitor 2023, europa.eu. 

Tackling skills and labour 
shortages is an urgent concern 

to 

on 

constraint 

The shortage of skilled workers remains a 
production (26). 
major 
Approximately  half  of  all  companies  struggle 
to  fill  vacancies,  even  in  the  long  term.  This 
creates  major 
business 
obstacles 
activity (27).  There  are  some  3  million  people 
(6.8%  of  the  extended  labour  force)  on  the 
margins  of  the  labour  market,  including  1.3 
million unemployed people who are looking for 
work and 530 000 people who work part-time 
and  would  be  willing  to  work  longer  hours. 
There is also scope to tap the potential of the 
inactive population. Groups with  relatively low 
employment  rates  and  greater  labour  market 
potential include people with low qualifications 
(employment  rate  of  66.1%  in  2023),  people 
born outside the EU (67.1%), and in particular 
women  born  outside  the  EU  (56.4%).  While 
citizens  of  other  EU  countries  have  almost  as 
high  employment  rates  as  Germans,  it  is 
taking  time  to  integrate  refugees  into  the 
labour market (employment rate at about two 
thirds the rate of German citizens) and people 
fleeing Ukraine (one third the rate) (28). 

in  2022), 

Shortages  of  skills  are  also  impacting 
competitiveness,  innovation  capacity  and 
the  twin  transition.  Although  the  rate  of 
adults  enrolled  in  learning  in  the  past  12 
months is above the EU average (53.7% vs. EU 
there  are  significant 
39.5% 
shortages  of  skilled  workers  in  many  growth-
inducing  areas  essential  for  the  green  and 
digital transition and for boosting R&I capacity. 
According  to  the  European  Labour  Authority, 
shortages affected several occupations related 
to  the  green  transition,  such  as  construction 
managers,  electricians  and  engineers.  There 

(26)  533 000 vacancies could not be filled because there 

were no qualified unemployed people to fill them. See 
also: IW Köln, 2023, Jahresrückblick 2022, iwkoeln.de. 

(27)  Deutsche Industrie- und Handelskammer (DIHK), 2023, 

DIHK Fachkräftereport 2023/24, dihk.de. 

(28)  Institut für Arbeitsmarkt- und Berufsforschung (IAB), 
2024, Zuwanderungsmonitor Februar 2024, iab.de. 
Employment following the national definition, referring 
to employment subject to social security contributions. 

13 

 
 
 
year.  It  is  a  step  in  the  right  direction,  but  it 
only covers up to 10% of German schools.  

of 

employment 

Insufficient  provision  of  early  childhood 
education  and  care  (ECEC)  limits  both 
equal  opportunities  for  children  and  the 
full-time 
parents, 
especially  women. 
In  2022,  93.7%  of 
children  between  3  and  school  age  attended 
ECEC,  below  the  EU-level  target  of  96%.  Too 
often  in  Germany,  having  a  child  is  linked  to 
being  out  of  employment.  The  employment 
rate of women aged 25-49 with children was 
76.1% in 2023, around 10 pps lower than for 
women without  children. This is also reflected 
in one of the highest gender gaps in part-time 
employment  in  the  EU  (36.9  pps  in  2023 
against the EU average of 20.2 pps), resulting 
in significant gaps in gender pay (17.7% vs EU 
12.7%) and pensions (27.6% vs EU 26%). The 
RRF  will  supplement  national  investments  by 
creating  90 000  places  in  childcare.  However, 
this  is  still  below  the  shortfall  in  supply  of 
around  430 000 (30). 
is 
current unmet demand for 529 000 whole-day 
school  places,  limiting  parents'  ability  to  take 
up full-time employment (31). 

In  addition,  there 

Modernising the pension system 

to 

creating 

pressure 

Population  ageing  is  putting  pressure  on 
the  pension 
The  workforce 
system. 
contributing to the statutory pension system is 
declining,  pension  expenditure  is  expected  to 
increase, 
raise 
contribution  rates  and  the  federal  subsidy  or 
to let pension levels fall. Supporting the use of 
company pensions as well as state-subsidised 
capital-based 
schemes 
(Riester-Rente)  could  help  secure  pension 
adequacy.  However,  only  around  half  of 
employees  acquire  entitlements  to  company 
pensions.  Also,  the  Riester-Rente  suffers  from 
requiring 
low-yielding  safe 
assets and high administration costs. The plan 

investment 

pension 

private 

in 

(30)  Bertelsmann Stiftung, 2023, Fachkräfte-Radar für KiTa 
und Grundschule 2023, bertelsmann-stiftung.de. 

to  build  up  a  capital-based  component  in  the 
statutory  pension  system 
(Generationen-
kapital)  with  yearly  capital  investments  of 
EUR 12 billion (0.3% of GDP) improves pension 
sustainability  only  to  a  limited  extent.  Longer 
working 
lives  contribute  to  both  pension 
system  sustainability  and  higher  pensions. 
However, since 2014, Germans can take early 
retirement without  a loss of entitlement after 
45  years  of  work.  About  one  third  of  people 
retiring  yearly  (260 000  people)  use  this 
possibility. 

Keeping up the momentum on the 
green transition 

Germany  is  not  on  track  to  reach  its 
greenhouse gas reduction targets, despite 
improvements.  Under  the  Effort  Sharing 
Regulation, Germany aims to reduce emissions 
by  50%  by  2030  compared  to  2005 levels.  It 
has  made  notable  progress  on  sectoral 
decarbonisation,  particularly  in  the  energy 
sector. In 2023, there has been a 12% surge in 
installed  renewable  energy  capacity,  primarily 
due 
in  solar 
photovoltaics. Germany's plan to cover at least 
80%  of  gross  electricity  consumption  with 
renewable energy by 2030 is ambitious (2023: 
51.8% (32)).  Germany  has  taken  significant 
steps  to  implement  reforms  to  accelerate  the 
roll-out  of  renewable  energy.  However,  it  is 
backtracking  on  the  goal  of  its  territorial  just 
transition  plan  to  phase  out  coal  (Annexes  6 
and 7). 

to  a  significant 

increase 

remains  a 
Sectoral  decarbonisation 
challenge,  particularly  for  the  transport 
and  buildings  sectors.  The  transport  sector 
increased  its  final  energy  consumption  by 
significant 
6.3% 
investment  in  public  transport  and  freight 
infrastructure,  far  exceeding  the  measures 
included in the RRP. For instance, while the RRP 
supports  the  upgrade  of  seven  rail  lines  to 
fast-track  lines,  major  rail  line  expansion 

in  2023. 

requires 

It 

(31)  IW Köln, 2023, Noch 700.000 Ganztagsplätze müssen 

(32)  Umweltbundesamt, 2024, Renewable energies in 

geschaffen werden, iwkoeln.de. 

figures, umweltbundesamt.de. 

14 

 
 
 
Box 4: 

The mid-term review of cohesion policy funds for Germany 

The mid-term review of the cohesion policy funds is an opportunity to assess cohesion 
policy programmes and to tackle emerging needs and challenges in EU Member States 
and their regions. Member States are reviewing each programme taking into account, among 
other things, the challenges identified in the European Semester, including in the 2024 country-
specific recommendations. This review forms the basis for a proposal by the Member State for 
the definitive allocation of 15% of the EU funding included in each programme. 

Germany  has  made  progress  in  implementing  cohesion  policy  programmes  and  the  European 
Pillar of Social Rights, but challenges remain (Annexes 14 and 17). Significant regional disparities 
persist  in  terms  of  employment  and  labour  productivity,  although  the  less  developed  regions 
have  gradually  been  catching  up  on  labour  productivity.  Against  this  background,  it  remains 
important  to  continue  the  implementation  of  planned  priorities,  with  particular  attention  to:  (i) 
research,  development  and  innovation,  especially  in  the  east  of  the  country,  education  and 
training  to  tackle  the  challenges  posed  by  the  twin  transition;  (ii)  business  development  and 
support for businesses, in particular SMEs; (iii) energy efficiency and renewable energy, climate 
change adaptation and carbon footprint; (iv) continuing to mobilise cohesion policy for the twin 
transition  in  regions  with  high-performing  sectors;  (v)  quality  and  inclusiveness  of  education, 
training  and  lifelong  learning  to  acquire  labour  market  relevant  skills;  (vi)  active  inclusion  and 
improving employability, in particular for disadvantaged groups. 

Germany  could  also  benefit  from  the  opportunities  provided  by  the  Strategic  Technologies  for 
Europe  Platform  (STEP)  Regulation  to  support  the  development  or  manufacturing  of  critical 
technologies 
technologies,  and 
biotechnologies, and to tackle shortages of labour and skills in these sectors. (36) 

technologies,  clean  and 

resource-efficient 

in  digital 

projects  have  been  delayed  or  halted  as  the 
investment  gap  until  2027  is  at  least  EUR 18 
billion (33).  There  is  also  a  need  to  ensure  the 
roll-out  of  electric  vehicles  by  providing 
infrastructure.  In  2023,  Germany  had  about 
112 000  publicly  accessible  charging  points, 
one  for  every  15  e-vehicles  against  the  EU 
average of 1:10. On buildings, Germany needs 
to  step  up  action  on  the  energy  renovation 
beyond  the  RRP  to  reduce  primary  energy 
consumption  by  39%  by  2030  from  2018 
levels,  as  outlined  in  its  long-term  renovation 
strategy. Residential final energy consumption 
increased  by  4.1%  between  2018  and  2022. 
The share of renewable energy in heating and 
cooling  is  also  comparatively  low  (17.5%  in 
2022, below the EU level of 24.8%) (Annex 7). 

Building  on  the  recent  progress  made  on 
renewables,  action  is  needed  to  further 
expand  and  reinforce  the  grid.  To  reduce 
the  curtailment  of  renewable  energy  of  more 
than  8  TWh  in  2022,  and  to  enable  the 
integration  of  additional  renewable  energy 
capacity,  Germany’s  electricity  grid  needs 

(33)  Frankfurter Rundschau, 2024, Finanzkrise bei der Bahn: 

For 

instance, 

significant  upgrading  and  expanding (34).  With 
the  regulatory  framework  adapted  to  support 
the  integration  of  renewable  energy  into  the 
grid  and 
to  accelerate  grid  expansion, 
challenges remain for the transmission grid in 
enabling  long-distance  transport  and  avoiding 
congestion. 
long-distance 
transport has been hampered by delays in the 
construction  of 
lines 
‘SuedLink’ (35)  and 
‘SuedOstLink’.  Work  to 
upgrade  and  digitalise  the  distribution  grid  is 
also  needed  to  avoid  congestion,  integrate 
distributed  renewable  energy  sources,  ensure 
cybersecurity, and cater for increased demand 
by  electrifying 
the  heating  and  cooling, 
transport  and  industry  sectors.  To  these  ends, 
implementing  the  planned  public  investments 
needs to be accelerated (Annex 7). 

the  high-voltage 

There  is  scope  to  improve  sustainable 
agricultural  practices  and  the  protection 
of  carbon  sinks.  Farming  practices  continue 
to  pollute  water  bodies  with  nitrates  and 
pesticides  above  the  monitoring  thresholds. 

(34)  Bundesverband Erneuerbare Energie (BEE), 2021, Neues 
Strommarktdesign, klimaneutrales-stromsystem.de. 

(35)  Handelsblatt, 2022, Betreiber Transnet: Stromautobahn 

Suedlink erst 2028 fertig, handelsblatt.de. 

Ausbauprojekte auf der Kippe, fr.de. 

(36)  Regulation (EU) 2024/795, europa.eu.  

15 

 
 
 
 
 
 
Rewetting peatlands could reverse the trend of 
falling  net  carbon  removals,  alongside  action 
to  mitigate  emissions  from  this  sector  and  to 
promote carbon sequestration (Annex 6).  

16 

 
KEY FINDINGS 

With its wide policy scope, Germany’s RRP 
includes measures to address a series of 
structural  challenges,  in  synergy  with 
other  EU  funds,  including  cohesion  policy 
funds, by: 

strengthening 
capital-based pensions; 

company  pensions  and 

•  Raising  the  employment  rate  of  older 
workers,  including  by  reducing  incentives 
for early retirement; 

•  Taking  steps 

to  decarbonise 

the 
economy  and  the  industry  through 
in  building 
investments 
reforms  and 
renovations,  clean  transport,  decarbonising 
industry and the hydrogen value chain; 

•  Supporting  the  digital  transition  by 
investing  in  key  technologies  and  in  the 
digital  transformation  of  the  automotive 
industry, and public administration; 

•  Investing  in  people  to  boost  economic 
growth  and  social  resilience  through 
reforms  and  investments  in  education  and 
training, including early childhood education 
and care (ECEC), and healthcare; 

•  Addressing 
investment  barriers  by 
approval 
planning 
and 
accelerating 
procedures 
the 
up 
building 
and 
administrative capacity of local authorities. 

The  implementation  of  Germany’s  RRP  is 
facing  significant  delays  which  require 
to  ensure  a  successful 
decisive  actions 
the  measures  of 
implementation  of  all 
Germany’s RRP by August 2026. 

Beyond  the  reforms  and  investments  in 
the  RRP  and  Cohesion  programmes, 
Germany would benefit from: 

•  Increasing  public  investment,  including 

at regional and local levels; 

•  Limiting  budget  transfers  to  the 
pension  system  to  avoid  crowding  out 
public  investment.  Actions  may  include 
and 
reforming 

financing 

side 

the 

•  Implementing  tax  measures  to  boost 
sustainable 
inclusive  growth  and 
competitiveness, 
by 
providing  stronger  incentives  to  increase 
hours  worked,  reducing  the  tax  wedge, 
relying  more  on  environmental  taxation  or 
further 
incentives 
improving 
through corporate taxation; 

investment 

example 

for 

•  Boosting  competitiveness  and  private 
investment  by  removing  obstacles  and 
administrative 
strengthening 
burden, 
alternative  forms  of  financing  for  new 
companies,  and  supporting  R&D  and  IT 
spending; 

•  Speeding up the digital transformation 
by promoting digital skills and accelerating 
the  digitalisation  of  public  administration 
and  the  roll-out  of  very  high-capacity 
digital  networks,  especially  fibre  optics, 
with a focus on rural areas; 

•  Tackling 

the  shortage  of  skilled 
improving 
workers,  among  others  by 
education  outcomes,  more  action  on  re-
/upskilling  and  support  for  people  to  join 
the 
incentives  to 
increase hours worked; 

labour  market,  and 

•  Maintaining  the  momentum  on  the 
green transition by reinforcing, expanding 
and  further  digitalising  electricity  networks 
to  ensure  smooth 
integration  of  an 
increasing  share  of  renewable  energy,  and 
by focusing on the decarbonisation of high-
emission sectors, in particular transport and 
buildings. 

17 

 
 
ANNEXES 

 
 
 
 
LIST OF ANNEXES 

Cross-cutting indicators 

A1.  Sustainable Development Goals 

A2.  Progress in the implementation of country-specific recommendations 

A3.  Recovery and resilience plan – implementation 

A4.  Other EU instruments for recovery and growth 

A5.  Resilience 

Environmental sustainability 

A6.  European Green Deal 

A7.  Energy transition and competitiveness 

A8.  Fair transition to climate neutrality 

Productivity 

A9.  Resource productivity, efficiency and circularity 

A10.  Digital transformation 

A11.  Innovation 

A12.  Industry and single market 

A13.  Public administration 

Fairness 

A14.  Employment, skills and social policy challenges in light of the European Pillar of Social Rights 

A15.  Education and training 

A16.  Health and health systems 

A17.  Economic and social performance at regional level 

Macroeconomic stability 

A18.  Key financial sector developments 

A19.  Taxation 

A20.  Table with economic and financial indicators 

A21.  Debt sustainability analysis 

LIST OF TABLES 

A2.1. 
A3.1. 

Summary table on 2019-2023 CSRs 
Key facts of the German RRP 

21 

23 

23 

25 

29 

31 

34 

36 

36 

40 

46 

48 

48 

50 

53 

55 

60 

62 

62 

64 

66 

68 

71 

71 

74 

77 

78 

26 
29 

 
 
 
Support from EU instruments in Germany 
Resilience indices across dimensions for Germany and the EU-27 
Indicators tracking progress on the European Green Deal from a macroeconomic perspective 
Key energy indicators 
Key indicators for a fair transition in Germany 
Circularity indicators 

A3.2.  Measures in Germany's RRP 
A4.1. 
A5.1. 
A6.1. 
A7.1. 
A8.1. 
A9.1. 
A10.1.  Key Digital Decade targets monitored by the Digital Economy and Society Index indicators 
A11.1.  Key innovation indicators 
A12.1. 
Industry and the Single Market 
A13.1.  Public administration indicators 
A14.1.  Social Scoreboard for Germany 
A14.2.  Situation of Germany on 2030 employment, skills and poverty reduction targets 
A15.1.  EU-level targets and other contextual indicators under the European Education Area strategic framework 
A16.1.  Key health indicators 
A17.1.  Selected indicators at regional level - Germany 
A18.1.  Financial Soundness Indicators 
A19.1.  Taxation indicators 
A20.1.  Key economic and financial indicators 
A21.1.  Debt sustainability analysis - Germany 
A21.2.  Heat map of fiscal sustainability risks - Germany 

LIST OF GRAPHS 

Progress towards the SDGs in Germany 
Germany’s progress on the 2019-2023 CSRs (2024 European Semester) 
Total grants disbursed under the RRF 
Distribution of cohesion policy funding across policy objectives in Germany 
Distribution of RRF funding by pillar in Germany 
Greenhouse gas emissions from the effort sharing sectors in Mt CO2eq, 2005-2022 
Changes in livestock density and organic farming evolution 
Environmental investment gap, annual average 
Germany's energy retail prices for households and industry & service 
Trends in electricity prices for non-household consumers (EU and foreign partners) 
Germany's installed renewable capacity (left) and electricity generation mix (right) 
Fair transition challenges in Germany 
Job vacancy rate in transforming sectors and mining and quarrying 
ETS emissions by sector since 2013 
Treatment of municipal waste 

A1.1. 
A2.1. 
A3.1. 
A4.1. 
A4.2. 
A6.1. 
A6.2. 
A6.3. 
A7.1. 
A7.2. 
A7.3. 
A8.1. 
A8.2. 
A9.1. 
A9.2. 
A11.1.  SMEs' share of R&D expenditure 2021 and development between 2010-2021 
A12.1.  Total factor productivity 
A12.2.  Productivity by sector 
A13.1.  Government effectiveness 
A13.2.  a) Use of public authorities’ websites or apps (left side); b) e-government maturity (centre); c) share of individuals with 

basic or above basic overall digital skills (right side) 
A15.1.  Underachievement rates by field, PISA 2012, 2018 and 2022 
A16.1.  Life expectancy at birth, years 
A16.2.  Projected increase in public expenditure on healthcare over 2024-2070 
A17.1.  Germany, NUTS2: GDP per capita (2011) and GDP growth (2013-2022) 
A18.1.  Evolution of credit activity 
A19.1.  Tax revenues including social security contributions from different tax types, % of total revenue 
A19.2.  Tax wedge for single and second earners as a % of total labour costs, 2023 

LIST OF MAPS 

A17.1.  Germany, NUTS2: GDP per capita growth 2013-2022 

22 

30 
33 
34 
39 
45 
47 
49 
52 
53 
59 
61 
62 
63 
64 
66 
69 
72 
74 
77 
79 
80 

23 
25 
30 
32 
32 
36 
38 
38 
40 
41 
42 
46 
47 
48 
49 
53 
56 
56 
60 

61 
64 
66 
66 
68 
71 
75 
76 

68 

 
 
 
CROSS-CUTTING INDICATORS 
ANNEX 1: SUSTAINABLE DEVELOPMENT GOALS 

1

This  Annex  assesses  Germany’s  progress  on 
the  Sustainable  Development  Goals  (SDGs) 
along  the  four  dimensions  of  competitive 
sustainability.  The  17  SDGs  and  their  related 
indicators  provide  a  policy  framework  under  the 
UN’s  2030  Agenda  for  Sustainable  Development. 
The  aim  is  to  end  all  forms  of  poverty,  fight 
inequalities  and  tackle  climate  change  and  the 
environmental crisis, while ensuring that no one is 
left  behind.  The  EU  and  its  Member  States  are 
committed  to  this  historic  global  framework 
agreement  and  to  playing  an  active  role  in 
maximising  progress  on  the  SDGs.  The  graph 
below  is  based  on  the  EU  SDG  indicator  set 
developed  to monitor progress  on  the  SDGs  in  an 
EU context. 

While Germany performs well on most of the 
indicators  related  to  environmental 
SDG 
sustainability  (SDGs 2,  6,  9,  11,  12),  it  is 
moving  away  from  the  targets  for  SDG 14 
and, though improving, still needs to catch up 
with the EU average on affordable and clean 

Graph A1.1: Progress towards the SDGs in Germany 

final 

energy 

increased 

in  gross 

energy  (SDG 7)  and  climate  action  (SDG 13). 
Germany  has  made  some  progress  on  energy 
consumption  indicators,  including  the  share  of 
energy 
renewable 
consumption  (SDG 7;  from  15.5%  in  2017  to 
20.8%  in  2022).  Nevertheless,  it  remains  below 
the  EU  average  (23%)  and  its  energy  import 
from  64%  of  gross 
dependency 
available  energy  in  2017  to  68.6%  in  2022.  On 
SDG 13  (Climate  action),  net  greenhouse  gas 
emissions  decreased  from  10.9  tonnes  per  capita 
in 2017 to 9.3 tonnes per capita in 2022, although 
they still remain above the EU average (7.3 tonnes 
per capita in 2022). Average CO2 emissions per km 
from new passenger cars fell considerably in the 5 
years  between  2017  and  2022  (154.2 g  in  2017 
vs  105.9 g  in  2022)  and  are  now  below  the  EU 
average (109.8 g in 2022). Germany performs well 
on  sustainable  agricultural  production  and  has 
It 
reduced  agriculture’s  environmental  impact. 
reduced  ammonia  emissions  and  nitrate 
in 
groundwater (SDG 2), although both remain above 
in 
the  EU  average,  and  achieved  reductions 
premature  deaths  due  to  fine  particulate  matter 

For detailed datasets on the various SDGs, see the annual Eurostat report ‘Sustainable development in the European Union’; for 
details on extensive country-specific data on the short-term progress of Member States: Key findings – Sustainable development 
indicators. A high status does not mean that a country is close to reaching a specific SDG, but signals that it is doing better than 
the EU on average. The progress score is an absolute measure based on the indicator trends over the past 5 years. The calculation 
does not take into account any target values as most EU policy targets are only valid for the aggregate EU level. Depending on 
data availability for each goal, not all 17 SDGs are shown for each country. 
Source: Eurostat, latest update of 25 April 2024. Data refer mainly to the period 2017-2022 or 2018-2023. Data on SDGs may 
vary across the report and its annexes due to different cut-off dates. 

23 

 
 
 
 
 
 
 
(SDG 11).  Various  measures  in  the  recovery  and 
resilience  plan  (RRP)  that  support  the  use  of 
renewable  hydrogen in  industry  and  the transport 
sector  will  help  reduce  greenhouse  gas  emissions 
and increase the share of renewable energy. 

inequalities 

Germany  is  performing  well  on  some  SDG 
indicators  related  to  fairness  (SDGs 1,  3,  8). 
However,  though  improving,  it  still  needs  to 
catch  up  with  the  EU  average  on  gender 
equality  (SDG 5)  and  affordable  and  clean 
energy  (SDG 7).  On  quality  education  (SDG 4) 
(SDG 10),  Germany 
and  reducing 
needs  to  catch  up  with  the  EU  average  and  is 
moving  further  away  from  the  SDG  targets. 
Germany  generally  performs  better  than  the  EU 
average  in  areas  linked  to  poverty,  health  and 
decent  jobs  and  growth.  On  health  (SDG 3),  road 
traffic  deaths  and  fatal  accidents  at  work  have 
declined and are proportionally below their level in 
the  rest  of  the  EU.  Smoking  prevalence  dropped 
below the EU average (23%, vs 25% in the EU in 
2020).  At  the  same  time,  19%  of  the  adult 
population  was  obese  in 2019,  up  from  16.9%  in 
2016  and  above  the  EU  average  of  14.8%  (in 
2022). On gender equality (SDG 5), the unadjusted 
gender  pay  gap  is  particularly  high  in  Germany 
(17.7%,  vs  12.7%  in  the  EU  in  2022).  While  the 
overall share of people at risk of poverty or social 
exclusion (SDG 1) is slightly below the EU average 
(21.1%,  vs  21.6%  in  the  EU  in  2022),  there  is  a 
significant  urban-rural  gap  (SDG 10).  There  is 
room  for  improvement  on  integrating  non-EU 
citizens  into  education  and  training  and  into  the 
labour market (SDG 10). Germany performs worse 
than  the  EU  average  on  EU/non-EU  citizenship 
gaps  for  early  school  leaving  (20.1  pps,  vs  17.1 
pps in the EU in 2023), as well as for the share of 
young  people  not  in  education,  employment  or 
training (15.7 pps vs 11.1 pps in the EU in 2023) 
and  for  the  employment  rate  (22.9  pps,  vs  13.2 
pps  in  the  EU  in  2023).  Tertiary  educational 
attainment (SDG 4), although improving, remained 
below the EU average in 2023 (38.4%; EU: 43.1%). 
The  German  RRP  helps 
improve  educational 
outcomes  for  students  with  a  learning  backlog, 
often  from  disadvantaged  backgrounds,  and 
promotes apprenticeships.  

Germany  performs  well  and 
is  further 
improving  on  SDGs  on  productivity  (SDGs 8 
and  9)  but  is  moving  away  from  the  SDG 
target  and  needs  to  catch  up  with  the  EU 
average  on  quality  education 
(SDG 4). 
Germany  performs  above  the  EU  average  on 

low-achieving  15-year-olds 

SDG 8 (Decent work and economic growth) and on 
SDG 9  (Industry,  innovation  and  infrastructure). 
With  3.13%  of  GDP  allocated  to  R&D  in  2022, 
Germany  has  some  of  the  highest  R&D  spending 
in the EU. The share of R&D personnel in the active 
population  rose  from  1.66%  in  2017  to  1.85%  in 
2022  (EU:  1.53%  in  2022).  However,  Germany  is 
below  the  EU  average  and  moving  further  away 
from  the  targets  for  SDG 4  (Quality  education), 
which  is  hampering  growth  and  competitiveness. 
The  share  of 
in 
mathematics  increased  significantly  from  21.1% 
in  2018  to  29.5%  in  2022.  A  rising  number  of 
young  people  leave  education  early  (10.3%  in 
2018,  vs  12.8%  in  2023),  well  above  the  EU 
average  (9.5%  in  2023).  Adult  participation  in 
learning  in  the  past  4  weeks  is  below  the  EU 
average  (DE:  8.3%;  EU:  12.7%  in  2023).  This  is 
also  reflected  in  the  low  share  of  adults  with  at 
least basic digital skills (52.2%, vs 55.6% in the EU 
in  2023).  The  German  RRP  targets  bottlenecks 
related  to  the  digitalisation  of  administration  and 
the  economy,  for  instance  by  supporting  the 
digitalisation of vehicle supplier companies. It also 
further helps address challenges related to digital 
education and training.  

Germany 
is  performing  well  on  SDG 
indicators related to macroeconomic stability 
(SDGs 8, 16, 17) and has further improved its 
performance. Germany performs well on SDG 16 
(Peace,  justice  and  strong  institutions),  showing  a 
stable  and  secure  environment  for  pursuing 
economic  activities,  and  on  SDG 8  (Decent  work 
and economic growth). Germany further increased 
its  employment  rate  from  78.9%  in  2018  to 
81.1% in 2023, which is very high compared to the 
EU  average  (75.3%  in  2023).  The  share  of  young 
people  not  in  education,  employment  or  training 
reached  8.8%  in  2023,  below  the  EU  average 
(11.2%), and long-term unemployment is low (1% 
vs EU 2.1% in 2023). In contrast, at 21.9% of GDP 
in  2023,  Germany’s  investment  share,  although 
improving,  remained  below  the  EU  average  of 
22.7%  of  GDP.  The  RRP  includes  a  package  of 
reforms to speed up public investment and tackle 
investment 
private 
investment  and  reduce  the  savings-investment 
imbalance. 

bottlenecks 

unlock 

to 

As the SDGs form an overarching framework, any 
links  to  relevant  SDGs  are  either  explained  or 
depicted with icons in the other Annexes. 

24 

 
ANNEX 2: PROGRESS IN THE IMPLEMENTATION OF COUNTRY-SPECIFIC 
RECOMMENDATIONS 

Graph A2.1: Germany’s progress on the 2019-2023 
CSRs (2024 European Semester) 

Source: European Commission. 

The Commission has assessed the 2019-2023 
country-specific  recommendations  (CSRs) (37) 
addressed  to  Germany  as  part  of  the 
European  Semester.  These  recommendations 
concern  a  wide  range  of  policy  areas  that  are 
related to  12  of  the  17  Sustainable Development 
Goals  (see  Annexes  1  and  3). The  assessment 
considers  the  policy  action  taken  by  Germany  to 
date (38) and the commitments in its recovery and 
resilience  plan  (RRP) (39).  At  this  stage  of  RRP 
implementation,  67%  of  the  CSRs  focusing  on 
structural  issues  from  2019-2023  have  recorded 
at  least  ‘some  progress’,  while  33%  recorded 
‘limited  progress’  (see  Graph  A2.1).  As  the  RRP  is 
implemented  further,  considerable  progress  in 
addressing structural CSRs is expected in the years 
to come. 

(37)  2023 CSRs : EUR-Lex - 32023H0901(05) - EN - EUR-Lex 

(europa.eu) 

2022 CSRs: EUR-Lex - 32022H0901(05) - EN - EUR-Lex 
(europa.eu) 

      2021 CSRs: EUR-Lex - 32021H0729(05) - EN - EUR-Lex 

(europa.eu) 
2020 CSRs: EUR-Lex - 32020H0826(05) - EN - EUR-Lex 
(europa.eu) 
2019 CSRs: EUR-Lex - 32019H0905(05) - EN - EUR-Lex 
(europa.eu) 

(38)  Including policy action reported in the national reform 

programme and in Recovery and Resilience Facility (RRF) 
reporting (twice a year reporting on progress in implementing 
milestones and targets and resulting from the payment 
requests assessment). 

(39)  Member States were asked to effectively address in their 
RRPs all or a significant subset of the relevant country-
specific recommendations issued by the Council. The CSR 
assessment presented here considers the degree of 
implementation of the measures included in the RRP and of 
those carried out outside of the RRP at the time of 
assessment. Measures laid down in the Annex of the 
adopted Council Implementing Decision on approving the 
assessment of the RRP, which are not yet adopted or 
implemented but considered credibly announced, in line with 
the CSR assessment methodology, warrant ‘limited progress’. 
Once implemented, these measures can lead to 
‘some/substantial progress or full implementation’, 
depending on their relevance. 

25 

Limited progress33%Some progress52%Substantial progress9%Full implementation6% 
 
 
 
   
 
 
Table A2.1:  Summary table on 2019-2023 CSRs 

(Continued on the next page) 

26 

GermanyAssessment in May 2024*RRP coverage of CSRs until 2026**Relevant SDGs2019 CSR 1Some ProgressWhile respecting the medium-term budgetary objective, use fiscal and structural policies to achieve a sustained upward trend in private and public investment, in particular at regional and municipal level. Some ProgressRelevant RRP measures being implemented as of  2020, 2021 and planed as of  2022, 2023.SDGs 8, 9, 16Focus investment-related economic policy on education;Limited ProgressRelevant RRP measures being implemented as of 2020, 2021 and planned as of  2022.SDGs 4, 10, 11research and innovation;Some ProgressRelevant RRP measures being implemented as of 2020,2021 and planned as of 2022 and 2023.SDGs 9, 10, 11digitalisation and very-high capacity broadband;Some ProgressRelevant RRP measures being implemented as of 2020, 2021 and planned as of 2022.SDGs 9, 10, 11sustainable transport Some ProgressRelevant RRP measures being implemented as of 2020 and 2021.SDGs 10, 11as well as energy networks Some ProgressRelevant RRP measures being implemented as of 2020, 2021 and planned as of 2023.SDGs 7, 9, 10, 11, 13and affordable housing, taking into account regional disparities. Limited ProgressRelevant RRP measures being implemted as of 2021.SDGs 1, 2, 8, 10, 11Shifttaxesawayfromlabourtosourceslessdetrimentaltoinclusiveand sustainable growth.Some ProgressRelevant RRP measures being implemented as of 2021.SDGs 8, 10, 12Strengthencompetitioninbusinessservicesandregulatedprofessions.Limited ProgressSDG 92019 CSR 2Some ProgressReduce disincentives to work more hours,Some ProgressRelevant RRP measures are being implemented as of 2021.SDGs 8, 10, 12including the high tax wedge,  in particular for low-wageSome ProgressRelevant RRP measures are being implemented  as of 2020, 2021.SDGs 8, 10, 12and second earners.Limited ProgressRelevant RRP measures planned  are being implemented of 2020, 2021.SDGs 8, 10, 12Take measures to safeguard the long-term sustainability of the pension system, while preserving adequacy.Limited ProgressRelevant RRP measures planned as of 2021.SDG 8Strengthen the conditions that support higher wage growth, while respecting the role of the social partners. Substantial ProgressRelevant RRP measures are being implemented  as of 2021.SDG 8Improve educational outcomes and skills levels of disadvantaged groups.Limited ProgressRelevant RRP measures are being implemented  as of 2020, 2021 and planned as of 2022.SDGs 4, 8, 102020 CSR 1Some ProgressTakeallnecessarymeasures,inlinewiththegeneralescapeclauseoftheStabilityandGrowthPact,toeffectivelyaddresstheCOVID-19pandemic,sustaintheeconomyandsupporttheensuingrecovery.Wheneconomicconditionsallow,pursuefiscalpoliciesaimedatachievingprudentmedium-termfiscalpositionsandensuring debt sustainability, while enhancing investment. Not relevant anymoreNot applicableSDGs 8, 16Mobiliseadequateresourcesandstrengthentheresilienceofthehealth system, including by deploying e-health services.Some ProgressRelevant RRP measures are being implemented as of 2020, 2021 and planned as of 2022.SDG 32020 CSR 2Some ProgressFront-load mature public investment projects Some ProgressRelevant RRP measures are being implemented as of 2020, 2021 and planned as of 2022.SDGs 8, 16and promote private investment to foster the economic recovery. Some ProgressRelevant RRP measures are being implemented as of 2020, 2021 and planned as of 2022.SDGs 8, 9Focus investment on the green and digital transition, in particular on sustainable transport, Some ProgressRelevant RRP measures are being implemented as of 2020 and 2021.SDG 11clean, efficient and integrated energy systems, Some ProgressRelevant RRP measures are being implemented as of 2020, 2021 and planned as of 2023.SDGs 7, 9, 13digital infrastructure and skills, Some ProgressRelevant RRP measures are being implemented as of  2020, 2021 and  planned as of 2022.SDG 4, 9housing, Limited ProgressRelevant RRP measures are being implemented as  of 2021.SDGs 1, 2, 8, 10education Limited ProgressRelevant RRP measures are being implemented as of 2020, 2021 and planned as of 2022.SDG 4and research and innovation. Some ProgressRelevant RRP measures are being implemented as of 2020, 2021 and planned as of 2022, 2023.SDG 9Improve digital public services across all levels Limited ProgressRelevant RRP measures are being implemented as of 2021 and planned as of 2022.SDGs 9, 16and foster the digitalisation in SMEs. Some ProgressRelevant RRP measures are being implemented as of 2020 and 2021.SDGs 8, 9Reduce the regulatory and administrative burden for businesses.Some ProgressRelevant RRP measures are being implemented as of  2020, 2021 nd planned as of 2022.SDGs 8, 9 
 
 
 
  
 
Table (continued) 

(Continued on the next page) 

27 

2021 CSR 1Not relevant anymoreIn2022,maintainasupportivefiscalstance,includingtheimpulseprovidedbytheRecoveryandResilienceFacility,andpreservenationally financed investment.Not relevant anymoreNot applicableSDGs 8, 16Wheneconomicconditionsallow,pursueafiscalpolicyaimedatachievingprudentmedium-termfiscalpositionsandensuringfiscalsustainability in the medium term. Not relevant anymoreNot applicableSDGs 8, 16Atthesametime,enhanceinvestmenttoboostgrowthpotential.Payparticularattentiontothecompositionofpublicfinances,onboththerevenueandexpendituresidesofthebudget,andtothequalityofbudgetarymeasuresinordertoensureasustainableandinclusiverecovery.Prioritisesustainableandgrowth-enhancinginvestment,inparticularinvestmentsupportingthegreenanddigitaltransition. Not relevant anymoreNot applicableSDGs 8, 16Giveprioritytofiscalstructuralreformsthatwillhelpprovidefinancingforpublicpolicyprioritiesandcontributetothelong-termsustainabilityofpublicfinances,including,whererelevant,bystrengtheningthecoverage,adequacyandsustainabilityofhealthand social protection systems for all.Not relevant anymoreNot applicableSDGs 8, 162022 CSR 1Substantial ProgressIn2023,ensurethatthegrowthofnationallyfinancedprimarycurrentexpenditureisinlinewithanoverallneutralpolicystance,takingintoaccountcontinuedtemporaryandtargetedsupporttohouseholdsandfirmsmostvulnerabletoenergypricehikesandtopeoplefleeingUkraine.Standreadytoadjustcurrentspendingtothe evolving situation.Substantial ProgressNot applicableSDGs 8, 16Expandpublicinvestmentforthegreenanddigitaltransitions,andforenergysecuritytakingintoaccounttheREPowerEUinitiative,includingbymakinguseoftheRecoveryandResilienceFacilityandother Union funds.Substantial ProgressNot applicableSDGs 8, 16Fortheperiodbeyond2023,pursueafiscalpolicyaimedatachieving prudent medium-term fiscal positions.Full ImplementationNot applicableSDGs 8, 16Improvethetaxmixformoreinclusiveandsustainablegrowth,inparticular by improving tax incentives to increase hours worked.Some ProgressRelevant RRP measure are being implemented as of 2021.SDGs 8, 10, 12Safeguard the long-term sustainability of the pension system.Limited ProgressRelevant RRP measure are being implemented as of 2021.SDG 82022 CSR 2Proceedwiththeimplementationofitsrecoveryandresilienceplan,inlinewiththemilestonesandtargetsincludedintheCouncilImplementing Decision of 13 July 2021.SwiftlyfinalisethenegotiationswiththeCommissiononthe2021–2027cohesionpolicyprogrammingdocumentswithaviewtostarting their implementation.2022 CSR 3Some ProgressRemove investment obstaclesLimited ProgressRelevant RRP measure are being implemented as of 2021.SDGs 8, 9andboostinvestmentinvery-high-capacitydigitalcommunicationnetworks.Some ProgressSDG 92022 CSR 4Some ProgressReduce overall reliance on fossil fuels and diversify their importsSome ProgressRelevant RRP measures being planned as of 2020, 2021 and 2023.SDGs 7, 9, 13by improving energy efficiency, incentivising energy savings,Some ProgressRelevant RRP measures being planned as of 2021 and 2023.SDG 7diversifying energy supplies and routes,Substantial ProgressRelevant RRP measures being planned as of 2020, 2021 and 2023.SDGs 7, 9, 13removinginvestmentbottlenecks,furtherstreamliningpermittingprocedures,boostinginvestmentinandacceleratingthedeploymentof electricity networks and renewable energy,Some ProgressRelevant RRP measures being planned as of 2021.SDGs 7, 8, 9, 13andfurtheradvancingparticipationinenergy-relatedcross-bordercooperation.Limited ProgressRelevant RRP measures being planned as of 2021.SDGs 7, 9, 132023 CSR 1Substantial ProgressWinddowntheemergencyenergysupportmeasuresinforce,usingtherelatedsavingstoreducethegovernmentdeficit,assoonaspossiblein2023and2024.Shouldrenewedenergypriceincreasesnecessitateneworcontinuedsupportmeasures,ensurethatthesearetargetedatprotectingvulnerablehouseholdsandfirms,fiscallyaffordable and preserve incentives for energy savings.Substantial ProgressNot applicableSDGs 8, 16Ensureprudentfiscalpolicy,inparticularbylimitingthenominalincreaseinnationally-financednetprimaryexpenditurein2024tonot more than 2.5%.Some ProgressNot applicableSDGs 8, 16Preservenationally-financedpublicinvestmentandensuretheeffectiveabsorptionofRRFgrantsandotherEUfunds,inparticulartofosterthegreenanddigitaltransitions.Implementpublicinvestment initiatives as planned.Full ImplementationNot applicableSDGs 8, 16Fortheperiodbeyond2024,continuetopursueamedium-termfiscalstrategyofgradualandsustainableconsolidation,combinedwithinvestmentsandreformsconducivetohighersustainablegrowth, to achieve a prudent medium-term fiscal position. Full ImplementationNot applicableSDGs 8, 16Improvethetaxmixformoreinclusiveandsustainablegrowth,inparticularbyimprovingtaxincentivesinordertoincreasehoursworked. Some ProgressRelevant RRP measure are being implemented as of 2021.SDGs 8, 10, 12Safeguard the long-term sustainability of the pension system.Limited ProgressRelevant RRP measure are being implemented as of 2021.SDG 8RRP implementation is monitored by assessing RRP payment requests and analysing reports published twice a year on the achievement of the milestones and targets. These are to be reflected in the country reports. Progress on the cohesion policy programming documents is monitored under the EU cohesion policy. 
 
 
  
 
Table (continued) 

Note: 
* See footnote  (39).  
** RRP measures included in this table contribute to the implementation of CSRs. Nevertheless, additional measures outside the 
RRP are necessary to fully implement CSRs and address their underlying challenges. Measures indicated as 'being implemented' 
are only those included in the RRF payment requests submitted and positively assessed by the European Commission.  
Source: European Commission 

28 

2023 CSR 2Significantlyacceleratetheimplementationofitsrevisedrecoveryandresilienceplan,alsobyensuringsufficientresources,andswiftlyfinalisetheaddendumandtheREPowerEUchapterwithaviewtorapidlystartingitsimplementation.Proceedwiththespeedyimplementationofcohesionpolicyprogrammes,inclosecomplementarity and synergy with the recovery and resilience plan.2023 CSR 3Limited ProgressSpeedupthedigitalisationoftheentireservicechainforpublicservices and Limited ProgressRelevant RRP measures are being implemented as of 2021 and planned as of 2022.SDGs 9, 16improve people’s digital skills. Limited ProgressRelevant RRP measures are being implemented as of  2020, 2021 and  planned as of 2022.SDG 4Remove investment obstaclesLimited ProgressRelevant RRP measure are being implemented as of 2021.SDGs 8, 9andboostinvestmentinvery-high-capacitydigitalcommunicationnetworks.Some ProgressSDG 92023 CSR 4Some ProgressIncreaseeffortstofurtherreducetheoverallrelianceonfossilfuelsby Some ProgressRelevant RRP measures are being implemented as of 2020, 2021 and planned as of  2023.SDGs 7, 9, 13boostinginvestmentinandacceleratingthedeploymentofrenewableenergyandelectricitynetworksthroughimprovedadministrativecapacityandstreamlinedprocesses,includingpermitting procedures. Some ProgressRelevant RRP measures being implemented as of 2021.SDGs 7, 8, 9, 13Step up energy efficiency efforts in transport,Limited ProgressRelevant RRP measures being implemented as of 2021 and  2021.SDGs 7, 9, 11, 13buildingandindustry,includingthroughinvestmentsinheatingsystems and Some ProgressRelevant RRP measures being implemented as of 2020 and 2021 and planned as of 2023.SDGs 7, 9, 13furtherpolicymeasuresaimedattheprovisionandacquisitionofskills and competences needed for the green transition.Limited ProgressRelevant RRP measures being implemented  as of 2020, 2021 and planned as of  2022.SDG 4RRP implementation is monitored by assessing RRP payment requests and analysing reports published twice a year on the achievement of the milestones and targets. These are to be reflected in the country reports. Progress on the cohesion policy programming documents is monitored under the EU cohesion policy. 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
ANNEX 3: RECOVERY AND RESILIENCE PLAN – IMPLEMENTATION 

Table A3.1:  Key facts of the German RRP 

This Annex provides a snapshot of Germany’s 
implementation of its recovery and resilience 
plan  (RRP),  past  the  mid-way  point  of  the 
Recovery  and  Resilience  Facility’s 
(RRF) 
lifetime.  The  RRF  has  proven  central  to  the  EU’s 
recovery  from  the  COVID-19  pandemic,  helping 
speed  up  the  twin  green  and  digital  transition, 
while  adapting  to  geopolitical  and  economic 
resilience 
developments, 
against  future  shocks.  The  RRF  is  also  helping 
implement the UN Sustainable Development Goals 
and 
country-specific 
recommendations (see Annex 2).   

strengthening 

address 

and 

the 

The  RRP  paves  the  way  for  disbursing  up  to 
EUR 28  billion  in  grants  under  the  RRF  over 
the  2021-2026  period, representing  0.7% of 
Germany’s  GDP (40).  As  of  mid-May  2024,  EUR 
6.25 billion has been disbursed to Germany under 
the RRF. 

Germany  still  has  EUR  21.8  billion  available 
in  grants  from  the  RRF.  This  will  be  disbursed 
after  the  assessment  of  future  fulfilment  of  the 
remaining  97  milestones  and  targets (41)  included 
in  the  Council  Implementing  Decision (42)  (CID), 
ahead  of  the  2026  deadline  established  for  the 
RRF.  

Germany’s progress in implementing its plan 
is  recorded  in  the  Recovery  and  Resilience 
Scoreboard (43). The scoreboard gives an overview 
of the progress made in implementing the RRF as 
a  whole.  Graph  A3.1  shows  the  current  state  of 
play as reflected in the scoreboard. 

Source: RRF Scoreboard 

Germany  has  submitted  a  REPowerEU 
chapter to be added to its RRP, to phase out 
its  dependency  on  Russian  fossil  fuels, 
diversify  its  energy  supplies  and  produce 
more  clean  energy  in  the  coming  years.  The 
the 
chapter 
Commission and, once adopted, it will contribute to 
ensuring  the  supply  of  affordable,  secure,  and 
sustainable energy. 

is  now  under  assessment  by 

The  plan  has  a  strong  focus  on  the  green 
transition,  dedicating  47%  of  the  available 
funds  to  measures  that  support  climate 
objectives  and  48.1%  of  its  total  allocation 
to support the digital transition. It also retains 
a  strong  social  dimension  with  social  protection 
measures,  especially  related  to  social  cohesion 
and education. 

With  one  payment 
request  completed, 
Germany’s  implementation  of  its  RRP  is 
significantly  delayed.  The  Commission  gave  a 
positive assessment of the payment request on 28 
November 2023, taking into account the opinion of 
the Economic and Financial Committee. This led to 
EUR  4  billion  being  disbursed  in  financial  support 
on  28  December  2023 (44).  The  related  36 
milestones  and  targets  covered  reforms  and 
investments  such  as  the  completion  of  projects 
related 
charging 
infrastructure,  research  in  hydrogen  and  the  roll-

electro-mobility 

and 

to 

(40)  GDP information is based on 2023 data. Source: 

https://ec.europa.eu/economy_finance/recovery-and-
resilience-scoreboard/index.html?lang=en 

(41)  A milestone or target is satisfactorily fulfilled once a Member 
State has provided evidence to the Commission that it has 
reached the milestone or target and the Commission has 
assessed it positively in an implementing decision. 

(42)  https://data.consilium.europa.eu/doc/document/ST-10158-

2021-ADD-1/en/pdf  

(43)  https://ec.europa.eu/economy_finance/recovery-and-

resilience-scoreboard/country_overview.html 

(44)  When requested payments are disbursed, the pre-financing 
is cleared proportionally. The net amounts are quoted here. 

29 

Initial plan CID adoption date13 July 2021Scope Revised plan with REPowerEU chapter under assessmentLast major revision8 December 2023Total allocation EUR 28 billion in grants (0.7% of 2023 GDP)Investments and reforms 26 investments and 15 reforms Total number of milestones and targets133Fulfilled milestones and targets36 (27% of total) 
 
 
 
 
 
 
  
 
 
 
out  of  hydrogen-related  projects,  support  for 
microelectronics, and the digitalisation of railways, 
in  the  areas  of  promoting  the 
and  others 
digitalisation  and 
the  efficiency  of  public 
administration  as  well  as  the  acceleration  of  the 
planning and approval procedures in the transport 
sector,  the  development  of  vaccines,  and  the 
support for childcare and apprenticeships. 

Graph A3.1: Total grants disbursed under the RRF 

As  of  15  May  2024,  Germany  is  working 
towards  its  second  payment  request.  Table 
A3.2  highlights  some  relevant  measures  achieved 
so far, and some that will be implemented before 
2026 to keep making Germany’s economy greener, 
more digital, inclusive, and resilient. 

Table A3.2:  Measures in Germany's RRP 

Note: This graph displays the amount of grants, including pre-
financing, disbursed so far under the RRF. Grants are non-
repayable financial contributions. The total amount of grants 
given to each Member State is determined by an allocation 
key and the total estimated cost of the respective RRP. 
Source: RRF Scoreboard 

Source: FENIX 

30 

EUR 6.25billion (22.3%)Total allocation: EUR 28.019billionReforms and investments implemented• Agreement for learning support for learners with pandemic learning backlogs• Expansion of childcare• Support to electric carsUpcoming reforms and investments• Reform package to tackle investment bottlenecks ​• Digitalisation of administration and public health• Energy-efficient renovations in buildings 
   
 
   
 
 
 
 
 
 
 
 
 
 
 
 
  
ANNEX 4: OTHER EU INSTRUMENTS FOR RECOVERY AND GROWTH 

EU funding instruments provide considerable 
resources for recovery and growth to the EU 
Member States. In  addition to the EUR 28 billion 
of  Recovery  and  Resilience  Facility  (RRF)  funding 
described in Annex 3, EU cohesion policy funds (45) 
provide EUR 19.9 billion to Germany for the 2021-
2027  period (46).  Support 
two 
instruments combined represents around 1.16% of 
the  country’s  2023  GDP,  compared  to  an  EU 
average  of  5.38%  of  GDP (47).  Cohesion  policy 
supports  regional  development,  economic,  social 
and  territorial  convergence  and  competitiveness 
through  long-term  investment  in  line  with  EU 
priorities and with national and regional strategies. 

these 

from 

in 

and 

research 

During  the  2014-2020  programming  period, 
cohesion  policy  funds  boosted  Germany’s 
competitiveness, with  tangible achievements 
notably 
innovation, 
renewable energy and social cohesion. By the 
end  of  the  eligibility  period  in  December  2023, 
2014-2020  cohesion  policy  funds (48)  had  made 
EUR 20.7 billion available to Germany (49), of which 
EUR 12.3 billion  has  been  disbursed  since  March 
2020,  when  the  COVID-19  pandemic  began (50). 
2014-2020  cohesion  policy  funds  supported 
research  and 
triggering 
EUR 1.45 billion of private investment. Over 4 500 
businesses introduced new products to the market, 
enabled  by  EU  support  to  their  research  and 
innovation  activities.  Thanks  to  cohesion  policy 
funds,  more  than  5 900  start-ups  were  created 
and  over  56 500  businesses  received  support, 
which helped them create nearly 21 800 new jobs. 
Support  to  promote  the  use  of  renewable  energy 

innovation  projects, 

(45)  In 2021-2027, cohesion policy funds include the European 
Regional Development Fund, the European Social Fund Plus 
and the Just Transition Fund. 

(46)  European territorial cooperation (ETC) programmes are 
excluded from the figure. In 2021-2027, the total 
investment, including national financing, amounts to 
EUR 40.3 billion. 

(47)  RRF funding includes both grants and loans, where 

applicable. The EU average is calculated for cohesion policy 
funds excluding ETC programmes. GDP figures are based on 
Eurostat data for 2022. 

(48)  In 2014-2020, cohesion policy funds included the European 
Regional Development Fund and the European Social Fund. 
REACT-EU allocations are included but ETC programmes are 
excluded. 

(49)  In 2014-2020, the total investment, including national 

financing, amounted to EUR 33.0 billion. 

(50) Cut-off date: 14 May 2024. 

31 

resulted  in  a  142 MW  increase  in  renewable 
energy production. During the same period, around 
3.4  million  participants  benefited  from  European 
Social  Fund  (ESF)  support  in  Germany.  Among 
them were more than 1 million migrants or people 
with a foreign background, including minorities. 

In  2021-2027, 

(JTF)  will  boost 

In  the  current  programming  period  (2021-
2027),  cohesion  policy will  provide a  further 
boost  to  Germany’s  competitiveness,  to  the 
green  transition  and  to  social  cohesion, 
improving  the  living  and  working  conditions 
the 
of  Germany’s  people. 
European Regional Development Fund (ERDF), with 
an  allocation  of  EUR 10.8 billion,  aims 
to 
strengthen research and innovation capacities and 
support  the  uptake  of  advanced  technologies, 
mainly  in  SMEs.  Around  43 500  businesses  are 
expected  to  receive  support.  The  ERDF  will  also 
support  the  green  transition,  focusing  on  the 
improvement  of  energy  efficiency  and  the  use  of 
renewable energy, which is expected to result in a 
yearly greenhouse gas emissions reduction of over 
1 million tonnes  of  CO2  equivalent.  The  Just 
innovation, 
Transition  Fund 
promote  economic  diversification  and  counteract 
deindustrialisation  in  the  four  Germany  regions 
where  the  phase-out  of  fossil  fuel  extraction  and 
related  activities  are  expected  to  have  the 
strongest  socio-economic  impacts  (North  Rhine-
Westphalia, 
and 
Brandenburg).  The  EUR 2.5 billion  allocated  to 
Germany under the JTF will support approximately 
4 300  businesses.  Furthermore,  it  will  improve 
education  facilities  for  over  27 000  people 
annually  and  enable  nearly  7 400  people  to 
participate  in  professional  training  to  address 
negative demographic trends and labour and skills 
shortages,  which  are  particularly  problematic  in 
these  regions.  The  European  Social  Fund  Plus 
(ESF+) 
labour-market  measures 
(EUR 1.8 billion),  social  inclusion  (EUR 2.14 billion), 
social  innovation  (EUR 0.24 billion)  and  education 
and  training  measures  (EUR 2.13 billion).  These 
education  and  training  measures  are  focused  on 
improving  equal  access  to  education  and  training 
as well as improving the quality, inclusiveness and 
labour-market relevance of education and training 
(e.g. green and digital skills). Lifelong learning will 
be  promoted  as  well.  With  this  work,  cohesion 
policy  supports  the  UN  Sustainable  Development 
Goals  (SDGs)  in  Germany,  in  particular  SDG  9 
(Industry, 
infrastructure),  SDG  8 
(Decent  work  and  economic  growth)  and  SDG  7 
(Affordable and clean energy). 

Saxony-Anhalt 

innovation, 

supports 

Saxony, 

 
 
 
 
 
Graph A4.1: Distribution of cohesion policy funding 
across policy objectives in Germany 

Graph A4.2: Distribution of RRF funding by pillar in 
Germany 

Source: European Commission 

and 

tank 

infrastructure. 

two  hydrogen  model 

Through combined action, cohesion policy and 
the recovery and resilience plan (RRP) have a 
mutually  reinforcing  impact  in  Germany.  For 
instance,  the  ERDF  supports  the  creation  of  a 
regional  hydrogen  ecosystem,  to  develop  the 
hydrogen  value  chains  of  the  future.  These 
investments complement support from the RRP in 
the  field  of  hydrogen,  based  on  an  interregional 
intervention logic and focusing on future hydrogen 
ERDF 
transport 
investments  in  this  area  have  a  regional  focus, 
covering 
regions  and 
complementary  components  of  the  hydrogen 
economy.  In  these  strategy-based  projects,  the 
entire value chain  – from the production of green 
hydrogen  to  transportation,  storage  and  use  –  is 
being  tested.  This  also  includes  new  ways  of 
hydrogen  production  (such  as  using  urban  or 
industrial  waste  water  as  a  source  of  hydrogen), 
knowledge 
to  SMEs  from 
specialised  research  centres  on  hydrogen  like 
‘H2BlackForest’  and 
lab’,  or  testing 
activities  on  the  use  of  hydrogen  via  the 
‘Hydrogenium’  centre.  Another  example  is  support 
under  both  the  ERDF  and  the  RRP  in  the  field  of 
digitalisation of businesses and public services, as 
well  as  interconnected  electric  mobility  in  urban 
areas. The contribution of cohesion policy and RRP 
funding by policy objective is illustrated by Graphs 
A4.1 and A4.2. 

transfer  activities 

‘H2  test 

(1) Each RRP measure helps achieve the aims of two of the 
six policy pillars of the RRF. The primary contribution is shown 
in the outer circle while the secondary contribution is shown in 
the inner circle. Each contribution represents 100% of the RRF 
funds. Therefore, the total contribution to all pillars displayed 
on this chart amounts to 200% of the RRF funds allocated to 
Germany. 
Source: European Commission 

The Technical Support Instrument (TSI) helps 
Germany strengthen its public administration 
and create a better enabling environment for 
EU  and  national  investment.  The  TSI  has 
funded  projects 
in  Germany  to  design  and 
implement growth-enhancing reforms since 2018. 
The  support  provided  in  2023  included  action  to 
among  others,  support  climate  adaptation  by 
focusing on wildfire prevention assistance; further 
strengthen 
framework; 
improve  security  at  the  port  of  Hamburg;  and 
improve specific monitoring and audit systems.  

the  spending 

review 

Germany also receives funding from several other 
EU 
in 
including 
Table A4.1. 

instruments, 

those 

listed 

32 

PO1 Smarter EuropePO2 Greener EuropePO4 Social EuropePO5 Europe closer to citizensPO8 JTF specific objectiveGreen transitionDigital transformationSmart, sustainable and inclusivegrowthSocial & territorial cohesionHealth & resilienceNext generation 
     
   
Table A4.1:  Support from EU instruments in Germany 

(1) RRF implementation period is 2021-2026. 
(2) The public sector loan facility’s programming period is 2021-2025 and the amount reflects the national share in its grant 
component reserved until the end of the period.   
(3) Common agricultural policy programming periods are 2014-2022 and 2023-2027.   
(4) EMFF – European Maritime and Fisheries Fund, EMFAF – European Maritime, Fisheries and Aquaculture Fund. 
(5) Data on the Connecting Europe Facility covers transport and energy and has a cut-off date of 15 May 2024. 
(6) Data on Horizon Europe (2021-2027) has a cut-off date of 13 May 2024. 
(7) 2021-2027 data on the LIFE programme has a cut-off date of 15 May 2024. 
(8) The amount of the EU guarantee signed under the EFSI Infrastructure and Innovation Window was derived based on the 
signed amount of the operations and the average internal multiplier, as reported by the EIB (cut-off date is 31 December 2023). 
(9) The amount of the EU guarantee and of the volume of operations signed under InvestEU includes the EU compartment as well 
as the Member State compartments (cut-off date is 31 December 2023). 
Source: European Commission 

33 

Amount 2021-2027 (EUR million)Cohesion policy19 860.6RRF grants (1)28 018.5Public sector loan facility (grant component) (2)188.0Common agricultural policy (3)30 744.0EMFF/EMFAF (4)211.8Connecting Europe Facility (5)1 096.2Horizon 2020 / Horizon Europe (6)5 168.0LIFE programme (7) 110.6Volume of operations (EUR million)European Fund for Strategic Investment 2015-2020 (8)7 943.0InvestEU 2021-2027 (9) 644.6EU grantsAmount 2014-2020 (EUR million)20 673.3--55 100.02 757.1 302.9219.62 415.510 127.0 177.7EU guaranteesEU Guarantee (EUR million) 
 
  
 
ANNEX 5: RESILIENCE 

Table A5.1:  Resilience indices across dimensions for Germany and the EU-27 

(1) The synthetic indices aggregate the relative resilience situation of countries across all considered indicators. For an indicator, 
each country’s relative situation in the latest available year is compared with the collection of values of that indicator for all 
Member States and all years in the reference period. 
Source: Resilience Dashboards - version spring 2024, data up to 2022 

resilience 

This  Annex  uses  the  Commission’s  resilience 
dashboards  (RDB) (51)  to  show  Germany’s 
relative 
and 
vulnerabilities (52)  that  may  be  of  relevance  for 
societal, 
green 
transformations,  and  for  dealing  with  future 
shocks and geopolitical challenges (53). 

capacities 

economic, 

digital 

and 

According  to  the  set  of  resilience  indicators 
in  the  RDB,  Germany  has  medium  overall 
vulnerabilities  and  medium-high  overall 
capacities,  both  of  which  have  remained 
broadly  stable  with  respect  to  last  year’s 
dashboard.  This 
the 
is  also 
indicators  across  the  various 
distribution  of 
resilience  dimensions: 
than  30%  of 
vulnerability  indicators  fall  into  the  medium-high 
or high category, whereas around 20% of capacity 
indicators  fall 
low  or  medium-low 
category.  

into  the 

reflected 

less 

in 

(51)  Resilience is defined as the ability not only to withstand and 
cope with challenges but also to undergo transitions, in a 
sustainable, fair, and democratic manner. See: European 
Commission, 2020, Strategic Foresight Report: Charting the 
course towards a more resilient Europe, ec.europa.eu. 

(52)  Vulnerabilities describe features that can exacerbate the 

negative impact of crises and transitions, or obstacles that 
may hinder the achievement of long-term strategic goals, 
while capacities refer to enablers or abilities to cope with 
crises and structural changes and to manage transitions. 

(53)  This Annex is linked to Annex 1 on SDGs, Annex 6 on the 
green deal, Annex 8 on the fair transition to climate 
neutrality, Annex 9 on resource productivity, efficiency and 
circularity, Annex 10 on the digital transition and Annex 14 
on the European pillar of social rights. 

stable 

compared 

the  variation 

In  the  social  and  economic  dimension, 
Germany has medium-low vulnerabilities and 
medium-high  capacities,  both  of  which  have 
remained 
to  2023. 
Vulnerabilities  continue  to  be  below  the  EU 
in  performance 
average,  but 
explained by students’ socio-economic background 
remains  high,  as  does  the  proportion  of  people 
employed in energy-intensive sectors. Government 
debt  has  dropped  noticeably  compared  to  the 
2023  RDB.  Germany  maintains 
its  strong 
capacities  in  terms  of  the  household  saving  rate, 
employment  rate,  and  insurance  sector  solvency 
capital ratio. 

remain 

In the green dimension, Germany’s capacities 
and  vulnerabilities 
steady,  at 
It 
medium-high  and  medium  respectively. 
stands out for its high capacities, such as the high 
number  of  environmental  patents  per  capita,  its 
high  energy  and  resource  productivity  and  its 
performance  in  urban  wastewater  treatment.  At 
the  same  time,  its  vulnerabilities  related  to  the 
number  of  fatalities  from  climate  extremes,  the 
energy  used  in  ICT  and  the  soil-sealing  index 
continue to be well above the EU average. 

In  the  digital  dimension,  vulnerabilities  and 
capacities  remain  stable,  at  medium  level.  
Germany  reduced  several  of  its  capacities  with  a 
the  number  of  young  people 
decline 
in 
participating 
learning  activities,  a 
in  online 
decreased use of online courses, and a drop in the 
value  of  e-commerce  sales  after  the  COVID-19 
pandemic.  Germany’s  capacities  in  terms  of  the 
advanced digital competence of adults and young 

34 

DEDEEU-272023 RDB2024 RDB2024 RDBHighMedium-highMediumMedium-lowLowHighMedium-highMediumMedium-lowLowCapacitiesGeopoliticalVulnerabilities0.640.630.41Capacities0.540.530.65DigitalVulnerabilities0.540.520.52Capacities0.660.610.65GreenVulnerabilities0.510.420.44Capacities0.790.770.70Social and economicVulnerabilities0.680.650.47Capacities0.750.750.67DimensionDistribution of indicators by vulnerabilities and capacitiesOverall resilienceVulnerabilities0.590.530.50Capacities0.700.680.67Vulnerabilities0%20%40%60%80%100%Vulnerabilities(59 indicators)Capacities(64 indicators) 
 
 
 
 
 
   
 
in  the 

people also continue to be relatively low while the 
ICT  sector 
increase  of  value  added 
contributed  positively  to  its  capacity.  On  a  more 
positive  note,  the  country’s  vulnerabilities  have 
remained  stable  with  respect  to  the  2023  RDB, 
with  Germany  performing  the  best  in  the  EU  for 
5G readiness. 

Germany’s  medium  geopolitical  resilience 
capacities  remain  below  the  EU  average, 
while  its  vulnerabilities,  medium-low,  are 
above  the  EU  average.  The  country  has 
improved  its  intra-EU  trade  in  energy.  It  has  also 
maintained  a  strong  net  international  investment 
position, making it resilient to global capital flows 
and  financial  distress.  On  the  other  hand,  the 
employment  gap  between  EU  and  non-EU 
nationals living in Germany remains high. 

35 

 
 
 
ENVIRONMENTAL SUSTAINABILITY 
ANNEX 6: EUROPEAN GREEN DEAL 

Germany  has  made  progress  in  the  green 
transition, with more action needed to specify 
the funding framework for the climate and energy 
transition  and  the  policies  needed  to  reach  its 
2030  effort  sharing  target,  on  biodiversity  and 
ecosystem protection, and other areas. This Annex 
provides  a  snapshot  of  climate,  energy,  and 
in 
environment  aspects  of 
Germany (54). 

transition 

the 

lacks 

(NECP) 

climate  plan 

Germany’s  draft  updated  national  energy 
and 
key 
information on investment needs and funding 
sources  to  achieve  its  2030  climate  and 
energy  targets.  The  plan  lacks  information  on 
the total investment needs for the planned policies 
and measures. The plan outlines some but not all 
sources  of  financing  and  lacks  a  consolidated 
overview  of  funding  sources  and  needs.  This 
means  it  is  not  possible  to  identify  potential 
funding  gaps.  As  a  consequence  of  the  Federal 
Constitutional  Court  annulling  in  late  2023  the 
transfer  of  pandemic  related  credits  into  the 
Climate and Transformation Fund, a large share of 
the funding in the draft plan is uncertain (55). 

Current  policies  and  measures  in  Germany 
are  insufficient  to  reach  its  2030  effort 
sharing  target (56)  and  it  has  yet  to  specify 
further  planned  action.  Germany’s  2022 
greenhouse  gas  emissions  from  its  effort  sharing 
sectors  are  expected  to  come  in  at  19.4%  below 
2005  levels.  Current  policies  are  projected  to 
reduce  Germany’s  emissions  from  the  effort 
sharing  sector  by  34.6%  from  2005  levels  by 

(54)  This Annex is complemented by Annex 7 on energy transition 

and competitiveness, Annex 8 on the fair transition to 
climate neutrality, Annex 9 on resource efficiency, circularity, 
and productivity, and relevant topics in other annexes to this 
country report. 

(55)  European Commission, 2023, Assessment of the draft 

updated National Energy and Climate Plan of Germany, 
commission.europa.eu 

(56)  The national greenhouse gas emission reduction target is 
laid down in Regulation (EU) 2023/857 (the Effort Sharing 
Regulation). The aim is to align action in the sectors 
concerned with the objective to reach the EU-level economy-
wide target of greenhouse gas reductions of at least 55% 
compared to 1990 levels. The target also applies to the 
sectors outside the current EU Emissions Trading System, 
notably buildings (heating and cooling), road transport, 
agriculture, waste, and small industry (known as the effort 
sharing sectors).  

36 

2030 (57).  Germany  has  not  provided  a  scenario 
‘with additional measures’. This is problematic as it 
is  projected  to  fall  short  of  its  effort  sharing 
target,  to  reduce  by  50%  from  2005  levels,  by 
15.4  percentage  points.  This  highlights 
the 
importance  of  planning  and  implementing  more 
ambitious climate action. The draft updated NECP 
reiterates  Germany’s  commitment  to  achieve 
climate neutrality by 2045. 

Graph A6.1: Greenhouse gas emissions from the 
effort sharing sectors in Mt CO2eq, 2005-2022 

Source: European Environment Agency 

There  is  scope  for  increasing  Germany’s 
target  for  renewable  energy  in  its  final 
updated  NECP (58).  Germany’s  renewable  energy 
contribution set in its draft updated NECP, 40% by 
2030, is slightly below the requirement of 41%. Its 
energy  efficiency  contribution  of  160.5  Mtoe  in 
final energy consumption for 2030 set in the draft 
updated  NECP reflect the contribution required by 
the Energy Efficiency Directive. 

(57)  The effort sharing emissions for 2022 are based on 
approximated inventory data. The final data will be 
established in 2027 after a comprehensive review. 
Projections on the impact of current policies (‘with existing 
measures’, WEM) as per Germany’s draft updated NECP. 

(58)  The EU target set out in the revised Renewable Energy 

Directive is to have 42.5% of gross final energy consumption 
coming from renewable energy sources by 2030, with the 
aspiration to reach 45%. The formula in Annex I to Directive 
(EU) 2023/1791 sets the indicative national contribution for 
Germany at 194.23 Mtoe for primary energy consumption 
and 155.95 Mtoe for final energy consumption. European 
Commission, 2023, Commission Recommendation of 
18/12/2023 Germany, commission.europa.eu 

05010015020025030035040045050020052022MtCO2eWasteSmall industryAgricultureBuildings (under ESR)Domestic transport (excl. aviation) 
 
 
 
     
 
    
 
to 

transport 

zero-emission 

Continued  effort  is  crucial  to  achieve  the 
in 
shift 
Germany (59).  Cars  are  used  for  over  89%  of the 
distances  travelled  (above  the  EU  average  of 
85%).  In  2022,  battery  electric  vehicles  made  up 
2%  of  Germany’s  car  passenger 
fleet,  a 
significantly  higher  share  than  the  EU  average 
(1.2%), but the continued increase in this share is 
challenged  by  the  cuts  to  financial  incentives.  In 
2023,  Germany  had  about  125 000  publicly 
accessible  charging  points,  one  for  every  15  e-
vehicles (against  the EU  average of 1:10).  Freight 
transport by road is slightly below the EU average 
(72%,  EU:  75%),  with  a  higher  share  of  inland 
waterways and rail. 53% of the railway network is 
electrified  (EU  average:  56%). 
Improving  the 
quality  and  service  of  rail  operations  would  help 
stimulate  demand  for  public  transport  and  ease 
road congestion (60). 

The  rewetting  of  peatlands  gives  a  prospect 
of  reversing  the  trend  of  falling  net  carbon 
removals  by  the  land  use,  land-use  change 
and forestry (LULUCF) in Germany. Germany is 
experiencing  a  concerning  trend  that  net  carbon 
removals  from  the  LULUCF  sector  have  fallen 
since  2017.  To  reach  its  2030  LULUCF  target, 
additional carbon removals of -3 751 kt CO2eq are 
needed (61). According to the latest projections for 
2030, Germany is expected to meet this target (62). 

impacts.  Germany 

Germany's  climate  change  risks  include  a 
particularly  high  risk  of  flooding  (including 
floods),  with  potentially  high 
coastal 
economic 
has  made 
climate  adaptation, 
significant  progress  on 
particularly on assessing and monitoring risks and 
impacts. It revised its national adaptation strategy 
(with  an  update  in  2024)  and  plan  and  requires 
the  federal  state  and  municipal  governments  to 
implement climate adaptation strategies. Germany 
has  a  high  share  of  insurance  coverage  against 
climate  risks,  except  for  coastal  flooding,  and  a 

(59)  Unless otherwise indicated, data in this section refer to 
2021. See European Commission, 2023, EU transport in 
figures, transport.ec.europa.eu 

(60)  In 2020, road vehicle drivers experienced peak-hour delays 
of 30 hours on average in Germany (EU average: 29 hours). 

(61) National LULUCF targets of the Member States in line with 

Regulation (EU) 2023/839. 

(62)  Projections submitted in Germany’s draft updated national 

energy and climate plan, 2023. 

37 

relatively low climate protection gap (63). Germany 
has  scope  to  improve  its  climate  adaptation 
policies, engagement with vulnerable stakeholders, 
and 
its  use  of  private-sector  capacities  and 
funding (64). 

Air  quality  in  Germany  continues  to  give 
cause  for  serious  concern,  despite  recent 
latest  available  annual 
improvements.  The 
estimates  (2020)  by  the  European  Environmental 
Agency  indicate  that  Germany  suffers  some  356 
years  of  life  lost  for  every  100 000  inhabitants 
due to exposure to particulate matter (PM2.5) and 
123  years  due  to  NO2  exposure.  The  indicator  for 
smog-precursor  emission  intensity  to  GDP  fell  by 
40%  between  2008  and  2021  to  reach 0.6 
tonnes/EUR 10.  All  three  metrics  were  below  the 
EU average. 

Despite  efforts  to  protect  biodiversity,  the 
state  of  ecosystems  is  still  a  matter  of 
concern.  By  the  end  of  2021,  Germany  had 
protected  37%  of  its  land.  According  to  the 
indicators  tracking  the  conservation  status  of 
protected habitats and species in Article 17 of the 
Habitats  Directive,  30%  of  habitats  and  26%  of 
species  were  in  a  good  conservation  status,  and 
over a third of habitats and species remained in a 
bad  conservation  status.  According  to  the  latest 
available data (2016), the Common Farmland Bird 
Index  was  84.4,  above  the  EU  average.  Germany 
also  has  one  of  the  highest  shares  of  red-listed 
species and habitat types for several classes in the 
EU, many of which, however, are still in decline. 

Intensive  agriculture  has  a  major  impact  on 
ecosystems,  biodiversity  and  air  quality.  The 
annual  output  value  of  Germany's  agricultural 
sector was EUR 55.4 billion (65) in 2023. The share 
of utilised agricultural area under organic farming 
increased to 9.7% in 2021, broadly in line with the 
EU average of 9.1%9 but still far from the national 
goal  of  at  least  30%  of  agricultural  area  under 
organic farming by 2030. According to the impact 
assessment  for  the  Soil  Monitoring  Law (66),  59% 

(63)  On the climate protection gap, see the annotations to Table 

A6.1. 

(64)  See the Commission’s 2023 assessment and 

recommendation on Germany’s progress on climate 
adaptation. 

(65)  Production value at basic price (2015=100). 

(66)  European Commission, 2023, Impact assessment for the 

Directive on Soil Monitoring and Resilience, 

 
 
 
 
of  Germany’s  soil  could  be  considered  as 
unhealthy (67). Over 50% of agricultural land has a 
nutrient  surplus,  while  the  loss  of  organic  carbon 
affects 43% of cropland area. Germany’s livestock 
density 
index  decreased  from  1.04  to  0.98 
between 2010 and 2020, remaining above the EU 
average of 0.75. Livestock production is distributed 
very  unevenly  among  the  regions.  The  main  hot 
spots  are  in  the  West/North-West  and  in  the 
South-East.  Most  regions  reported  a  fall  in  the 
number  of  livestock  units,  except  in  Weser-Ems 
and  Münster.  Germany  produced  131  kg  of  food 
waste per person in 2020, which represents the EU 
average. 

Intensive  poultry  and  pig  farming  is  the 
industrial  activity  that  puts  the  highest 
burden  on  the  environment  in  terms  of 
ammonia  emissions  into  the  air  and  nitrate 
pollution  of  water.  Overall,  the  agricultural 
sector  was  responsible  for  generating  82%  of  all 
ammonia  emissions  in  2021,  against  the  EU 
average  of  90.7%.  Only  2.7%  of  agricultural  land 
in  Germany  is  irrigated  and  the  water  abstracted 
for agricultural purposes accounted for 1.4% of all 
water abstracted in 2019. 

Graph A6.2: Changes in livestock density and 
organic farming evolution 

Livestock unit (LSU)/ha of UAA: it measures the stock of 
animals (cattle, sheep, goats, equidae, pigs, poultry and 
rabbits) converted in LSUs per hectare of UAA. 
Source: Eurostat 

The issue of nitrate pollution of water bodies 
persists,  especially  in  hotspots  with  a  high 

environment.ec.europa.eu (see p. 10, pp. 189-190, pp. 835-
845). 

(67)  However, not all soil degradation processes could be 

quantified for all land uses. This number simply indicates an 
order of magnitude. 

38 

The 

years. 

content 

nitrates 

livestock density. The latest figures for the gross 
nitrogen  balance  on  agricultural  land  in  Germany 
indicate an average surplus of 53.4 kg of nitrogen 
per  hectare  per  year  in  2019,  lower  than  in 
previous 
in 
groundwater  is  slightly  below  the  EU  average,  at 
20.2  against  20.5  mg  nitrates/l  with  26.7%  of 
groundwater  monitoring  stations  indicating  levels 
above  the  maximum  50  mg  nitrates/l.  Nitrate 
pollution  can  be  directly  linked  to  the  very  high 
livestock  density,  which  affects  surface  water 
quality and quantity in affected areas. By contrast, 
the  gross  phosphorus  balance  was  -4.8  kg/ha  in 
2019.  The  chemical  status  of  waterbodies  is 
affected by pesticide contamination. In 2021, 16% 
of surface monitoring sites were reported to have 
pesticide  levels  exceeding  the  thresholds  set  by 
the Water Framework Directive. This is lower than 
in 2018, but above most other EU countries. 

Graph A6.3: Environmental investment gap, annual 
average 

The numbers are computed by the European Commission 
based on the latest internal reports, Eurostat, EIB and national 
data sources. 
Source: European Commission 

Although investments in measures to protect 
biodiversity  have  increased,  Germany  would 
benefit  from  investing  more  in  sustainable 
water management and pollution prevention. 
According  to  the  latest  estimates,  the  overall 
environmental  investment  needs  for  2021-2027 
are  at  least  EUR 73.7  billion  a  year,  against  the 
financing  baseline  of  EUR 54  billion,  leaving  a 
wider  gap  than  under  the  previous  financing 
period,  equivalent  to  EUR 19.7  billion.  Germany 
expects to increase the investment for biodiversity 
and  ecosystems.  The  investment  gaps  to  achieve 
the  remaining  environmental  objectives  have 
widened.  The  annual  investment  gap  is  EUR 8.8 
billion for pollution prevention and control, EUR 6.2 
billion  for  the  circular  economy  and  waste,  and 

012024681020162020% LSU per hectare% of total utilised agricultural areaLivestock density index Germany (% LSU per ha)Livestock density index EU-27 (% LSU per ha)Organic farming Germany (% of total utilised agricultural area)Organic farming EU-27 (% of total utilised agricultural area)7,1332,0795,9982,0938,8404,9836,177002,0004,0006,0008,00010,00012,000Pollution prevention &controlWater managementCircular economy andwasteBiodiversity andecosystemsmillion EUR2014-20202021-2027 
      
 
      
close  to  EUR 5  billion  for  sustainable  water 
management.  

Table A6.1:  Indicators tracking progress on the European Green Deal from a macroeconomic perspective 

Sources:  (1)  Member  States’  emission  data  for  2019  and  2020  are  in  global  warming  potential  (GWP)  values  from  the  4th 
Assessment Report (AR4) of the Intergovernmental Panel on Climate Change (IPCC). Member States’ 2005 base year emissions 
under  Regulation  (EU)  2018/842,  emissions  data  for  2021  and  2022,  and  2030  projections  are  in  GWP  values  from  the  5th 
Assessment Report (AR5) of the IPCC. 2021 data are based on the final inventory reports, 2022 data are based on approximated 
inventory reports and European Environmental Agency’s calculation of effort sharing emissions. The final data for 2021 and 2022 
will  be  established  after  a  comprehensive  review  in  2027.  The  2030  target  is  in  percentage  change  of  the  2005  base  year 
emissions. Distance to target is the gap between the 2030 target and projected effort sharing emissions with existing measures 
(WEM) and with additional measures (WAM), in percentage change from the 2005 base year emissions. The measures included 
for  the  2030  emission  projections  reflect  the  state  of  play  as  reported  in  Member  States'  draft  updated  national  energy  and 
climate plans or, if unavailable, as reported by 15 March 2023 as per Regulation 2018/1999. (2) Net removals are expressed in 
negative figures, net emissions in positive figures. Reported data are from the 2024 greenhouse gas inventory submission. 2030 
value  of  net  greenhouse  gas  removals  as  in  Regulation  (EU)  2023/839  –  Annex  IIa.  (3)  The  2030  national  objectives  for 
renewable  energy  and  energy  efficiency  are  indicative  national  contributions,  in  line  with  Regulation  (EU)  2018/1999  (the 
Governance  Regulation),  the  EU-level  2030  renewable  energy  target  set  out  in  Directive  EU/2018/2001  amended  by  Directive 
EU/2023/2413 (the revised Renewable Energy Directive) – 42.5% of gross final energy consumption with the aspiration to reach 
45% –, and the formula in Annex I to Directive (EU) 2023/1791 (the Energy Efficiency Directive). (4) Passenger battery electric 
vehicles (BEV) and fuel cell electric vehicles (FCEV). (5) The climate protection gap refers to the share of non-insured economic 
losses caused by climate-related disasters, based on modelling of the risk from floods, wildfires, windstorms, and the insurance 
penetration rate. Scale: 0 (no protection gap) –4 (very high gap) (European Insurance and Occupational Pensions Authority, 2022). 
(6) Total water consumption in renewable freshwater resources available for a territory and period. (7) Material extractions for 
consumption and investment. (8) Years of potential life lost through premature death due to exposure to particulate matter with a 
diameter  of  less  than  2.5  micrometres.  (9)  Share  of  habitats  in  good  conservation  status  according  to  the  records  submitted 
under  Art.  17  of  the  Habitats  Directive  (Directive  92/43/EEC)  for  2013-2018.  (10)  Multi-species  index  measuring  changes  in 
population abundances of farmland bird species. (11) Source: annex 12 of the Commission’s proposal for a soil monitoring law, 
SWD (2023) 417 final. (12) Estimates of organic carbon content in arable land. 

39 

Target200520192020202120222030WEMWAMProgress to climate and energy policy targetsGreenhouse gas emission reductions in effort sharing sectors (1)Mt CO2eq, %, pp484,694.6-7%-15%-17%-19%-50%-15n/aNet greenhouse gas removals from LULUCF (2)Kt CO2eq8 865-2 462 5 7982 6224 382-30,840n/an/aShare of energy from renewable sources (1) (3)%7%17%19%19%21%41%--Energy efficiency: primary energy consumption (3)Mtoe321.6285.2262.2271.5260.6194.2Energy efficiency: final energy consumption (3)Mtoe219.7214.7202.3207.9202.8155.5Projected20182019202020212022202120222030Green transition: mobility         Greenhouse gas emissions: road transportMt CO2e---146.0146.8769.0786.6108.9Share of zero-emission vehicles in new registrations (4)% 11.76.613.417.5912.1n/aNumber of publicly accessible AC/DC charging points --420485779083560299178446956n/aShare of electrified railways%54.0%54.0%53.1%53.0%-56.1%-n/aGreen transition: buildings         Greenhouse gas emissions: buildingsMt CO2e---123.8117.5537.0486.773.5Final energy consumption in buildings2015=10097.1%97.7%97.2%100.5%94.9%104.0%97.2% Climate adaptation         Climate protection gap (5)score 1-4--1.61.71.91.51.5n/a20182019202020212022202020212022State of the environmentWater | Water exploitation index (WEI+) (1) (6)% of renewable freshwater5.72.6---3.6--Circular economy | Material footprint (7)tonnes per person16.115.714.814.814.514.214.814.9Pollution | Years of life lost due to air pollution by PM2.5 (8)per 100.000 inhabitants617439356400-545584-Biodiversity | Habitats in good conservation status (9)%29.714.7                       Common farmland bird index (10)2000=100-----78--Green transition: agri-food sectorOrganic farming% of total utilised agricultural area7.347.759.599.65-9.1--Nitrates in groundwatermg NO3/litre29.7120.527.45--20.42--Food waste per capitaKg per capita131--130131-Share of soil in poor health (11)%5941Soil organic matter in agricultural land (12)Mt per ha1004----7,904--DistanceEU-27 
 
     
 
ANNEX 7: ENERGY TRANSITION AND COMPETITIVENESS 

targeted  at 

the energy crisis have had the form of price 
and  income  support  schemes  and  they  were 
only  partially 
the  most 
vulnerable  households.  As  a  main  energy 
introduced  during  the  energy  crisis, 
measure 
Germany applied the Energiepreisbremse, including 
transfers  based  on  the  price  of  district  heating. 
This  absorbed  the  sharply  increased  costs  of 
including 
energy 
companies.  The  price  brakes  expired  on  31 
December 2023. However, for 2024 and 2025, the 
manufacturing 
industry  will  benefit  from  a 
substantial reduction in electricity taxes, as well as 
an  extension  of  the  existing  electricity  price 
compensation for five years.  

the  whole  population, 

for 

Graph A7.1: Germany's energy retail prices for 
households and industry & service 

(1) For industry, consumption bands are I3 for gas and IC for 
electricity, which refer to medium-sized consumers and 
provide an insight into affordability 
(2) For households, the consumption bands are D2 for gas 
and DC for electricity 
(3) Industry prices are shown without VAT and other 
recoverable taxes/levies/fees as non-household consumers 
are usually able to recover VAT and some other taxes 
Source: Eurostat 

In  relative  terms,  electricity  prices  for  non-
household  consumers  have  registered  a 
slight  increase  compared  to  the  US  and 
Japan  until  the  first  semester  of  2023,  thus 
potentially 
international 
competitiveness  of  energy-intensive  industries  in 
Germany. 

affecting 

the 

This  Annex (68)  sets  out  Germany’s  progress 
and  challenges  in  accelerating  the  net-zero 
energy  transition  while  bolstering  the  EU’s 
competitiveness 
energy 
sector (69). It considers measures and targets put 
forward in the draft updated National Energy and 
Climate Plans (NECP) for 2030 (70). 

clean 

the 

in 

in 
Germany  has  made  significant  steps 
implementing  reforms  to  accelerate  the 
deployment  of  renewables,  particularly  in 
solar  photovoltaics,  but  this  has  not  trickled 
down  at  consumer  and  industry  prices  level. 
Germany  requires  further  grid  expansion  and 
reinforcements,  to  enable  the 
integration  of 
additional  renewable  energy  capacity.  In  energy 
efficiency,  Germany  demonstrated  progress  but 
there  is  still  untapped  potential.  In  clean  energy 
technologies  manufacturing  and 
their  supply 
chains international competition is intensifying. 

gas 

and 

price 

electricity 

Retail  energy  prices  in  gas  and  electricity 
exhibited  a  decline  in  the  second  half  of 
2023  in  Germany  but  were  still  above  the 
levels  recorded  in  the  second  semester  of 
2022.  A  significant  difference  remains  between 
gas  and  electricity  prices, despite  the  introduction 
brakes 
of 
(‘Energiepreisbremse’) in January 2023. Gas prices 
aligned  with  the  EU  average,  while  levels  in 
electricity  prices  were  well  above  in  the  second 
half of 2023, by 41% and 8% for household and 
industrial  consumers,  respectively.  In  the  industry 
and  service  sector,  both  gas  and  electricity 
average prices reached their peak in the first half 
of  2023,  increasing  respectively  by  32%  and  7% 
compared  to  the  second  semester  of  2022. 
Average  gas  prices  then  decreased  by  8%  in  the 
second  half  of  the  year  while  average  electricity 
prices remained stable.  

The  direct  energy  support  measures  to  final 
consumers  implemented  since  the  outset  of 

(68)  It is complemented by Annex 6 as the European Green Deal 

focuses on the clean energy transition and by Annex 8 on the 
action taken to protect the most vulnerable groups, 
complementing ongoing efforts under the European Green 
Deal, REPowerEU and European Green Deal Industrial Plan. 

(69)  In line with the Green Deal Industrial Plan and the Net-Zero 

Industry Act 

(70)  Germany submitted its draft updated NECP in November 
2023; the Commission issued an assessment and country 
specific recommendations on 18 December 2023.  

40 

0.000.050.100.150.200.250.300.350.400.45€/KWhGas (industry & service) - DEGas (industry & service) - EUGas (households) - DEGas (households) - EUElectricity (industry & service) - DEElectricity (industry & service) - EUElectricity (households) - DEElectricity (households) - EU 
 
 
     
 
 
Graph A7.2: Trends in electricity prices for non-
household consumers (EU and foreign partners) 

(1) For Eurostat data (EU and DE), the band consumption is ID 
referring to large-sized consumers with an annual 
consumption of between 2 000 MWh and 20 000 MWh, such 
as in electricity intensive manufacturing sectors, and gives an 
insight into international competitiveness 
(2) JP = Japan 
Source: Eurostat, IEA 

in  Germany 

for  electricity),  and  quick 

Consumer  empowerment  in  the  electricity 
and  gas  markets 
is  progressing.  While 
installation and operation of smart meters is 
slowly  advancing,  energy  communities  are 
facing  some  implementation  challenges.  In 
2022  almost  100%  of  contracts  held  by 
household  consumers 
(for  both 
electricity  and  gas)  were  fixed-price  contracts. 
Dynamic  tariffs  were  not  introduced  until  2023. 
Switching rates in gas were stably below 15% (no 
data 
switching 
procedures  are  in  place.  In  2023,  the  German 
to 
law 
government  adopted  a 
the 
restart 
digitalisation  of 
transition  and 
the  energy 
accelerate  the  smart  meter  rollout,  aiming  for  a 
rollout  of  95%  by  2030  for  residential  and  small 
business consumers (with intermediate targets for 
2025  and  2028).  Implementation  of  renewable 
energy communities is slow, because the pertinent 
legislation is not yet transposed in its entirety. The 
rollout  of  smart  meters  has  been  slow (71).  The 
amendment  of  the  2023  Renewable  Energy 
for 
Sources  Act  provides  new 
establishing  energy 
such  as 
exemption from tendering duties. 

communities, 

incentives 

(71)  German Regulatory Framework, energycommunitieshub.com 

41 

regasification  units 

in  Wilhelmshaven, 

Germany  continues  to  increase  the  security 
of  its  gas  supply,  having  diversified  away 
from Russian gas by increasing imports from 
Norway,  the  Netherlands  and  Belgium,  as 
well  as  by  commissioning  its  first  LNG 
infrastructure 
in 
December  2022,  enabling  LNG 
imports. 
Germany  currently  has  three  operational  floating 
(FSRUs):  Lubmin, 
storage 
Brunsbüttel  and  Wilhelmshaven,  with  a  total 
annual  capacity  in  2023  of  approximately  9 bcm. 
Another three FSRUs are planned and are expected 
to be operational by mid-2024. This infrastructure 
could  benefit  regional  and  European  security  of 
supply. Germany has the largest underground gas 
storage  capacity  of  the  EU,  with  almost  23  bcm 
spread  across  44  facilities,  representing  around 
26%  of  its  annual  gas  consumption  in  2022. 
Germany  fulfilled  its  gas  storage  obligations  last 
winter,  reaching  99.77%  by  1  November  2023, 
and ended the winter season with a storage filled 
at 66.38% by 1 April 2024.. Germany managed to 
reduce its gas demand between August 2022 and 
January  2024  by  16%.  Annual  gas  consumption 
amounted to 79.3 bcm in 2022 (against 96.2 bcm 
in 2021). 

In its draft updated NECP, Germany seems to 
be  postponing  its  coal  phase-out,  compared 
to  what  is  laid  down  in  its  territorial  just 
transition  plan  (TJTP).  The  draft  updated  NECP 
is partially consistent with the adopted plan. While 
the plan states that Germany intends to phase out 
coal by 2038 at the latest, and to phase out lignite 
by  2030,  it  also  envisages  coal  and  lignite 
together  covering  about  6%  of  primary  energy 
consumption  by  2030  and  still  to  be  used  in 
2050. (72)  The  final  updated  NECP  should  ensure 
alignment with the timeline outlined in the TJTP. 

Installed  renewable  capacity  surged  by  12% 
in  2023 (73),  driven  by  the  significant 
increase in solar, in particular photovoltaics. 
Looking  forward,  Germany  has  ambitious  yearly 
development plans to cover at least 80% of gross 
electricity  consumption  with  renewable  energy 

(72)  European Commission, 2023: Assessment of the draft 

updated NECP, commission.europa.eu 

(73)  IRENA, 2023, Renewable Energy Statistics, irena.org, the data 
might differ from the Eurostat data because a different 
methodology is used to calculate the capacity in AC and DC. 

050100150200250Index ( 2018 S2 = 100)JPUKUSDEEU 
  
 
 
sources  by  2030,  which  equates  to  10 GW  in 
onshore wind and 22 GW from solar PV annually.  

Graph A7.3: Germany's installed renewable 
capacity (left) and electricity generation mix 
(right) 

(1) "Other" includes renewable municipal waste, solid biofuels, 
liquid biofuels, and biogas. 
Source: IRENA, Ember 

(an 

regards 

As 
the  acceleration  of  solar 
deployment,  total  installed  capacity  in  2022 
was  67 GW 
increase  of  12%),  almost 
exclusively from solar PVs. The total wind capacity 
in  Germany  for  2022  was  66 GW  (an  increase  of 
4%),  of  which  58 GW  was  onshore  and  8 GW 
offshore (74). Germany wants to achieve 30 GW in 
total  of  offshore  wind  by  2030  and  40 GW  by 
2035. This goal aligns with Germany’s non-binding 
agreement,  defined  by  the  non-binding  goals  in 
the EU Sea Basins agreement of January 2023.  

steps 

significant 

in 
Germany  made 
implementing  reforms  to  accelerate  the 
deployment  of  renewables.  There  is  a  clear 
visibility  of  the  project  pipeline  for  renewable 
energy projects in Germany, with clear targets for 
the  coming  years.  Germany  introduced  legislation 
which qualifies all renewable energies as being in 
the overriding public interest, speeding up different 
procedural  steps,  setting  goals  for  all  regions  for 
wind 
uniform 
standards  for  the  species  protection  assessment. 
Germany  has  created  a  single  unified  application 
process  for  the  entire  administrative  permit 
application  and  granting  process.  Moreover, 
intensive  use  of  Emergency 
Germany  made 
renewables  and, 
Regulation  2022/2577  on 
according  to  preliminary  numbers,  managed  to 
strongly 
increase  both  the  amount  of  wind 
capacity  installed  in  2023  and  (even  more)  the 
number of projects receiving permits.   

developments 

creating 

and 

(74)  IRENA, 2023, Renewable Energy Statistics, irena.org  

42 

 
 
 
Germany requires further grid expansion and 
reinforcements,  both  at  transmission  and 
distribution  level,  to  enable  the  integration 
of  additional renewable  energy  capacity and 
to  reduce  the  curtailment  of  renewable 
energy, which amounted to more than 8 TWh 
in  2022.  National  legislation  was  amended  in 
2023  to  enable  the  accelerated  expansion  of  the 
electricity  networks,  also  making  use  of  the  rules 
under  the  EU  Emergency  Regulation  to  advance 
grid  permitting.  Besides  the  swift  expansion  of 
high-voltage  transmission  grids,  including  the  on-
the 
going  Projects  of  Common 
reinforcement and digitalisation of the distribution 
grid  will  be  critical  for  the  electrification  of  the 
building  sector  (heat  pumps)  and  the  transport 
this  background, 
sector 
Germany  introduced  an  obligation  on  distribution 
system  operators  to  publish  distribution  network 
development  plans  every  two  years,  as  of  2024. 
The  German  government  published  a  storage 
strategy  at  the  end  of  2023  which  sets  out  key 
measures  to  increase  the  deployment  and  use  of 
storage, to balance the grid.  

(e-mobility).  Against 

Interest, 

its 

final 

Germany demonstrated progress but there is 
still untapped potential on energy efficiency. 
In  2022,  Germany  had  a  drop  in  primary  energy 
consumption  of  4.2%  compared  to  2021  and 
13.6%  compared  to  2012.  And  it  had  a  drop  in 
final  energy  consumption  of  2.4%  compared  to 
2021  and  5.9%  compared  to  2012.  In  this  last 
year,  the  best  results  came  from  the  services 
sector  which  decreased 
energy 
consumption  by  15.7%,  and  the  worst  from  the 
transport  sector  which  increased  its  final  energy 
consumption  by  6.3%.  The  German  recovery  and 
resilience  plan  supports  measures  addressing 
buildings,  transport,  and  industry.  Under  cohesion 
policy,  Germany  implements  energy  efficiency 
investment, 
in 
companies,  eco-friendly  production  processes  and 
public  buildings.  Germany  also  offers  many 
energy 
domestic 
efficiency 
for 
homeowners,  municipalities,  and  companies.  The 
focus  is  on  grants,  with  some  tax  rebates  and 
guarantees also offered.  

instruments 
subsidy 

support 
such  as 

for 
schemes 

targeting  deep 

renovations 

43 

 
target 

reduction 

In  relation  to  buildings,  Germany  needs  to 
step up its efforts in the residential sector to 
achieve  a  meaningful  contribution  to  its 
2030 
energy 
in  buildings.  Residential  final 
consumption 
increased  by  4.12% (75) 
energy  consumption 
between 2018 and 2022, while the national Long-
Term Renovation Strategy aims to reduce primary 
energy consumption in buildings by 39% between 
2018 and 2030.  

for 

low 

share 

relatively 

Germany’s 
of 
renewables in heating and cooling (17.5% in 
2022; EU average: 24.9%) is covered by more 
than  80%  biomass  use  (including  biogenic 
waste  incineration),  with  heat  pumps  covering 
almost  10%.  Despite  higher  increases  in  heat 
pumps sales in 2022 (55% more than the previous 
year),  Germany  is  among  the  countries  with  the 
lowest  number  of  heat  pumps  per  household. 
There  is  no  explicit  heating  target  stated  in  the 
draft  updated  NECP.  Residential  electricity  in 
Germany  is  still  3.5  times  more  expensive  than 
gas, meaning that end users save energy but pay 
more  if  they  chose  a  heat  pump  for  heating.  In 
2023,  Germany  passed  the  “Building  Energy  Act” 
(Gebäudeenergiegesetz)  which  requires  that  new 
buildings  be  equipped  with  a  heating  system 
powered at least 65% by renewable energy: as of 
January  2024,  for  newly  constructed  buildings  in 
new development areas, as of July 2026/2028, for 
existing buildings and newly constructed  buildings 
outside of new development areas. 

A 
low  number  of  market  surveillance 
activities  on  products  covered  by  ecodesign 
and  energy  labelling  creates  concerns  about 
compliance levels. This generates concerns with 
respect to the level playing field among economic 
operators and uncertainty as to compliance levels 
by  the  products  in  question.  This  could  mean 
missed energy and CO2 savings.   

Germany  expects  a  hydrogen  demand  of 
between 95 and 130 TWh by 2030, covered by 
domestic  generation  of  10  GW  and  hydrogen 
imports  of  between  45  and  90  TWh,  reflected  in 

(75)  Final energy consumption in households from Eurostat (data-
tables of December 2023), climate-corrected by the Joint 
Research Centre with reference period 2005-2022 (FEC 
climate corrected = FEC/ (HDD/HDD reference period) 

the 

requires 

necessary 

their  updated  2023  National  Hydrogen  Strategy. 
hydrogen 
This 
infrastructure to be in place. As per Germany’s first 
EU  list  of  Projects  of  Common  Interest  and 
Projects  of  Mutual 
Interest,  those  hydrogen 
infrastructure  projects  will  allow  Germany  to 
import hydrogen from all neighbouring regions.  

Germany  has  traditionally  had  a  strong 
innovation  performance  and  manufacturing 
base for clean energy technologies and their 
supply  chains.  But  international  competition 
is  intensifying.  The  German  PV  sector,  with  its 
material  producers,  mechanical  engineering, 
component  manufacturers  and  R&D  facilities  still 
occupies  a  strong  position  in  some  segments  of 
the  value  chain.  Germany  hosts  the  only  solar-
grade  polysilicon  supplier  in  Europe.  In  modules, 
Germany produces mainly for its domestic market, 
but lacks sufficient manufacturing capacity for PV 
ingots, wafers and cells. Germany has a number of 
manufacturing facilities for the main wind turbine 
components 
tower). 
Additionally,  other  German 
companies  are 
the  main  global 
providing  components 
manufacturers,  such  as  bearings,  gear  boxes  and 
transformers. In the battery sector, the leading cell 
local 
producers 
subsidiaries  of  Far  East  (mainly  Chinese)  or  US 
companies.  EU  owned  companies,  many  of  them 
German,  are  also  active  and/or  are  preparing  a 
number  of  battery  cell  production  facilities.  Some 
of  those  are  integrated  into  the  value  chain  of 
German car manufacturers. In Europe, Germany is 
currently  the  country  with  the  highest  installed 
manufacturing  electrolysis  capacity,  in  polymer 
electrolyte membrane (PEM) and alkaline. 

the  EU  are  mostly  the 

(nacelle, 

blades 

and 

to 

in 

Germany  ranks  fifth  in  the  world  in  the 
patenting  of  high-value  inventions  in  solar 
PV.  In  connection  to  this,  the  EU  having  the 
highest  share  of  the  global  market  for  clean 
energy technologies is notably driven by Germany, 
which  accounted  for  10%  of  the  world  market  in 
2019. Public and private funding for research and 
innovation  (R&I)  activities  grew  in  parallel  to 
economic  growth  between  2010  and  2019.  In 
2019,  private  R&I  spending  exceeded  public 
funding  by  a  factor  of  14  (EUR  936.4  million  vs 
EUR  13  391.2  million;  see  Annex  11).  Germany’s 
public  spending  for  research  and  innovation  in 
clean  energy  technologies  grew  steadily  from 
2014  to  2022,  from  around  800  million  to  over 
1,400 million EUR.  

44 

 
 
 
Table A7.1:  Key energy indicators 

(1) The ranking of the main suppliers is based on the latest available figures (for 2022) 
(2) Venture Capital investment includes Venture Capital deals (all stages), Small M&A deals and Private Equity (PE) growth deals 
(for companies that have previously been part of the portfolio of a VC investment firm or have received Angel or Seed funding). 
Source: Eurostat, Gas Infrastructure Europe, JRC elaboration based on PitchBook data (03/2024), JRC SETIS (2024) 

45 

20192020202120222019202020212022Import Dependency [%] 67.1%63.7%63.4%68.6%60.5%57.5%55.5%62.5%of Solid fossil fuels 47.2%44.1%47.8%50.0%43.3%35.8%37.3%45.8%of Oil and petroleum products 97.3%96.5%95.6%96.9%96.7%96.8%91.7%97.7%of Natural Gas 100.1%89.1%90.7%105.9%89.7%83.6%83.6%97.6%Dependency from Russian Fossil Fuels [%]of Natural Gas 48.8%65.2%65.4%29.6%39.7%41.3%41.1%21.0%of Crude Oil31.5%34.0%34.1%25.4%28.8%26.7%26.4%19.5%of Hard Coal46.7%48.1%52.6%30.5%43.5%49.1%47.4%21.5%2016201720182019202020212022Gas Consumption (in bcm)87.9                 95.0                 94.7                 95.6               92.9               99.0               89.6               Gas Consumption year-on-year change [%]8.1%8.1%-0.3%0.9%-2.8%6.5%-9.4%Gas Imports - by type (in bcm)97.4                 118.7              88.3                 94.8               80.4               84.8               87.7               Gas imports - pipeline97.4                 118.7              88.3                 94.8               80.4               84.8               87.7               Gas imports - LNG0.00.00.00.00.00.0-                 Gas Imports - by main source supplier (in bcm) (1)Norway10.7                 11.1                 2.5                   2.6                 16.5               16.2               27.7               Russia58.7                 62.1                 43.1                 46.2               52.5               55.4               25.9               20192020202120222023LNG Terminals - storage capacity m3 LNGNumber of LNG Terminals0001                    3                    LNG Storage capacity (m3 LNG)000174,000        763,000     Underground StorageNumber of storage facilities57                    57                    60                    60                  44               Technical Capacity (bcm)22.2                 21.8                 21.8                 22.0               22.0               20162017201820192020202120222023Gross Electricity Production (GWh) (2)650,449          653,723          640,468          606,917        575,462        592,799        580,266        -              Combustible Fuels419,596       404,286       385,445       334,214     302,330     332,188     335,279     -              Nuclear84,634         76,324         76,005         75,071       64,382       69,130       34,709       -              Hydro26,134         26,155         23,863         25,671       25,275       24,972       23,576       -              Wind79,924         105,693       109,951       125,894     132,102     114,169     124,816     -              Solar38,098         39,401         43,459         44,383       49,496       50,472       60,304       Geothermal175              163              178              197             231             244             206             -              Other Sources1,888           1,701           1,567           1,487         1,646         1,624         1,376         -              Gross Electricity Production [%]Combustible Fuels64.5%61.8%60.2%55.1%52.5%56.0%57.8%-              Nuclear13.0%11.7%11.9%12.4%11.2%11.7%6.0%-              Hydro4.0%4.0%3.7%4.2%4.4%4.2%4.1%-              Wind12.3%16.2%17.2%20.7%23.0%19.3%21.5%-              Solar5.9%6.0%6.8%7.3%8.6%8.5%10.4%-              Geothermal0.0%0.0%0.0%0.0%0.0%0.0%0.0%-              Other Sources0.3%0.3%0.2%0.2%0.3%0.3%0.2%-              Net Imports of Electricity (GWh)50,525-            52,459-            48,736-            32,667-          19,029-          18,575-          27,256-          -              As a % of electricity available for final consumption -9.5%-9.9%-9.3%-6.4%-3.9%-3.6%-5.6%-              Electricity Interconnection [%]8.9%10.5%10.9%11.4%11.0%11.5%11.2%Share of renewable energy consumption - by sector [%]Electricity32.3%34.6%37.6%40.6%44.2%43.9%47.6%-              Heating/cooling13.0%13.4%14.2%14.5%14.5%15.5%17.5%-              Transport7.0%7.0%7.9%7.6%10.0%8.1%9.9%-              Overall14.9%15.5%16.7%17.3%19.1%19.4%20.8%-                 20192020202120222023VC investments in climate tech start-ups and scale-ups (EUR Mln)248.12         636.88         1,198.89     1,390.81       1,717.29       as a % of total VC investment (3) in Germany start-ups and scale-ups4.0%9.2%7.6%10.0%20.9%Research & Innovation spending in Energy Union R&i prioritesPublic R&I (EUR mln)903.2           916.6           1,027.9        -              -              Public R&I (% GDP)0.03%0.03%0.03%-              -              Private R&I (EUR mln)12,228.4         12,069.2         -               -              -              Private R&I (% GDP)0.35%0.35%-                   -                 -                 ELECTRICITY/ENERGYCLEAN ENERGYGermanyEUENERGY DEPENDNCEDIVERSIFICATION OF GAS SUPPLIES 
 
   
 
ANNEX 8: FAIR TRANSITION TO CLIMATE NEUTRALITY 

Germany’s 

situations. 

This  Annex  monitors  Germany’s  progress  in 
ensuring  a  fair  transition  towards  climate 
neutrality  and  environmental  sustainability, 
particularly  for  workers  and  households  in 
green 
vulnerable 
economy  is  expanding.  Between  2015  and  2021, 
total jobs in the environmental goods and services 
sector  grew  by  25.8%  (to  around  709 000)  (EU: 
18.2%),  reaching  1.7%  of  total  employment,  but 
remaining  below  the  EU  average  (2.7%).  The 
greenhouse  gas  emission  intensity  of  Germany’s 
workforce  (see  Graph  A8.1  and  Table  A8.1) 
declined  from  19.1  to  14.6  tonnes  per  worker 
between  2015  and  2022,  slightly  above  the  EU 
average  (14.3  tonnes  per  worker  in  2022) (76), 
indicating  a  positive  trend  in  the  green  transition. 
Labour and skills shortages pose an obstacle to a 
smooth transition, pointing to the need for up- and 
reskilling of workers in declining and transforming 
sectors.  In  line  with  the  Council  Recommendation 
on  ensuring  a  fair  transition  towards  climate 
neutrality (77),  Germany’s  national  recovery  and 
resilience  plan,  as  well  as  the  territorial  just 
transition  plans  and  actions  supported  by  the 
European  Social  Fund  Plus  (ESF+),  outline  crucial 
reforms  and 
investments  for  a  fair  green 
transition. 

energy-intensive 

In  2023,  employment 

While  employment 
in  Germany’s  energy-
intensive industries declined in recent years, 
labour shortages remain a key challenge for 
in 
a  fair  transition. 
industries (78) 
Germany’s 
comprised  4.7%  of  total  employment,  above  the 
EU  average  (3.5%)  and  an  increase  compared  to 
2022  (4%).  Employment  in  mining  and  quarrying 
increased  in  2023  (to  around  71 900  workers), 
amounting  to  an  overall  decline  by  12.5%  since 
2015.  Labour  shortages  in  transforming  sectors 
remain  an  issue,  as  vacancy  rates  are  rising  (see 
Graph A8.2). The job vacancy rate in construction, 
a key sector for the green transition, is higher than 
the EU average (6.4% vs 3.6% in EU in 2023). This 

(76)  Workforce-related calculations are based on the EU Labour 
Force Survey. Note, in the 2023 country report for Germany, 
such indicators were calculated based on employment 
statistics in the national accounts. This may result in limited 
comparability across the two reports. 

(77)  The Council Recommendation of 16 June 2022 (2022/C 

243/04) covers employment, skills, tax-benefit and social 
protection systems, essential services and housing. 

(78)  Mining and quarrying (NACE B), chemicals (C20), minerals 

is in line with the perception of small and medium-
sized  enterprises  (SMEs)  in  the  sector,  68%  of 
which agree that skills shortages are holding them 
back  in  general  business  activities (79).  Germany 
receives  around  EUR  2.5  billion  from  the  Just 
Transition  Fund,  out  of  which  EUR  240  million  is 
for  measures  focusing  on  employment,  skills  and 
social integration. 

Graph A8.1: Fair transition challenges in Germany 

Source: Eurostat, EU Labour Force Survey, EMPL-JRC GD-
AMEDI/AMEDI+ and DISCO(H) projects (see Table A8.1). 

Upskilling  and  reskilling  in  energy-intensive 
industries  decreased,  while  skill  shortages 
persist.  While  42%  of  SMEs 
in  Germany 
(equalling the EU average) reported that the skills 
required  for  greening  business  activities  are 
becoming  more  important (79),  in  energy-intensive 
industries,  workers’  participation  in  education  and 
training decreased from 9.7% in 2015 to 8.8% in 
2023,  below  the  EU  average  (10.9%).  In  line  with 
the EU renewable energy target, by 2030 a further 
36  578  additional  skilled  workers  will  be  needed 
for  the  deployment  of  wind  and  solar  energy, 
which  may  require  an  investment  in  skills  of  EUR 
379.0-473.7 million (80). To address this challenge, 
out  of  the  significant  share  (EUR  353  million)  of 
the German ESF+ allocation dedicated to the green 
skills, jobs and economy, EUR 275 million address 
specifically green skills challenges.  

Energy  poverty  indicators  have  worsened 
recently due to the spike in energy prices. The 
share  of  the  population  unable  to  keep  their 
homes  adequately  warm  increased  from  4.1%  in 
2015  to  6.6%  in  2022,  although  it  is  still  below 

(79)  Eurobarometer on skills shortages, recruitment, and retention 

strategies in small and medium-sized enterprises. 

(C23), metals (C24) and automotive (C29). 

(80)  EMPL-JRC AMEDI+ project. 

46 

0.00.51.01.5Greenhouse gasemissions per workerEmployment inEnergy-IntensiveIndustriesEducation & trainingin Energy-IntensiveIndsutriesEnergy povertyTransport poverty(proxy)Carbon inequalityDE Latest vs EU LatestEU LatestDE 2015 vs EU Latest 
 
 
  
 
 
Table A8.1:  Key indicators for a fair transition in Germany 

Source: Eurostat (env_ac_ainah_r2, lfsa_egan2d, ilc_mdes01), EU Labour Force Survey (break in time series in 2021), EMPL-JRC 
GD-AMEDI/AMEDI+ and DISCO(H) projects. 

the EU average (9.3%) (81). The indicator increased 
by 3.3 pps between 2021 and 2022 on the back of 
energy  price  increases  due  to  supply  constraints 
caused  by  the  COVID-19  pandemic  and  Russia’s 
war  of  aggression  against  Ukraine,  despite  the 
emergency measures implemented in Germany. In 
particular,  13.6%  of  the  population  at  risk  of 
poverty  (AROP)  (EU:  20.1%)  and  7.2%  of  lower 
middle-income  households  (in  deciles  4-5)  (EU: 
11.6%)  were  unable 
their  homes 
adequately  warm  in  2022.  On  the  other  hand,  in 
January  2023,  52.3%  of  the  population  at  risk  of 
poverty  spent  a  considerable  proportion  of  their 
budget (more than 6%)  on private transport fuels  
(EU: 37.1%) (82).  

to  keep 

Despite  being  below 
the  EU  average, 
environmental  inequalities  remain  an  issue. 
In 2021, the consumption footprint for 20% of the 
population with the highest income was 1.8 times 
higher  than  the  footprint  of  the  poorest  20% (83) 
(EU:  1.8).  Meanwhile,  in  2021,  the  average  levels 
of air pollution stood below the EU average (9.4 vs 
11.4  µg/m3  PM2.5)  and  went  down  from  12.5 
µg/m3  PM2.5  in  2015.  The  proportion  of  the 
population  living  in  regions  exposed  to  critical 
levels  of  air  pollution (84)  amounted  to  28%, 
leading to a significant impact on health, affecting 

(81)  Energy poverty is a multi-dimensional concept. The indicator 
used focuses on an outcome of energy poverty. Further 
indicators are available at the Energy Poverty Advisory Hub. 

(82)  Affordability of private transport fuels is one key dimension 

of transport poverty. The indicator has been developed in the 
context of the EMPL-JRC GD-AMEDI/AMEDI+ projects. See EU 
Commission, 2021, Economic and distributional effects of 
higher energy prices on households in the EU, op.europa.eu.  

(83)  Developed in the context of the EMPL-JRC DISCO(H) project. 
Methodology explained in Joint Research Centre, 2024. 
Carbon and environmental footprint inequality of household 
consumption in the EU. JRC137520. The EU average refers to 
EU27 without Italy (household income data not available for 
IT in the HBS). 

vulnerable groups in particular, and around 32 300 
premature deaths annually (85).  

Graph A8.2: Job vacancy rate in transforming 
sectors and mining and quarrying 

B - Mining and quarrying 
C - Manufacturing 
D - Electricity, gas, steam and air conditioning supply 
E - Water supply; sewerage, waste management and 
remediation activities 
F - Construction 
H - Transportation and storage 
Source: Eurostat jvs_a_rate_r2. 

Germany  is  making  progress  in  the  fair 
transition towards climate neutrality.  Several 
ambitious measures to facilitate up- and reskilling 
and  training  for  the  green  transition  are  being 
implemented,  although  more  measures  could  be 
specifically  designed 
job-to-job 
transitions  towards  green  jobs  for  redundant 
workers.  Women’s  participation  in  education  and 
training  in  the  green  sectors  and  in  science, 
technology,  engineering  and  mathematics  (STEM) 
could  also  be  further  improved,  as  well  as  the 
provision of care services for children (86). 

support 

to 

(85)  EEA, Air Quality Health Risk Assessment, eea.europa.eu. 

(86)  Based on the monitoring review of the Council 

(84)  Two times higher than the recommendations in the WHO Air 

Quality Guidelines (annual exposure of 5µg/m3). 

Recommendation on ensuring a fair transition towards 
climate neutrality, which took place in October 2023. 

47 

0.0%1.0%2.0%3.0%4.0%5.0%6.0%7.0%BCDEFHEU 2023DE 2023DE 2015IndicatorDescriptionDE 2015DEEUGHG per workerGreenhouse gas emissions per worker – CO2 equivalent tonnes19.114.6 (2022)14.3 (2022)Employment EIIEmployment share in energy-intensive industries, including mining and quarrying (NACE B), chemicals (C20), minerals (C23), metals (C24) automotive (C29)5.1%4.7% (2023)3.5% (2023)Education & training EIIAdult participation in education and training (last 4 weeks) in energy-intensive industries9.7%8.8% (2023)10.9% (2023)Energy povertyShare of the total population living in a household unable to keep its home adequately warm4.1%6.7% (2022)9.3% (2022)Transport poverty (proxy)Estimated share of the AROP population that spends over 6% of expenditure on fuels for personal transport41.4%52.3% (2023)37.1% (2023)Carbon inequalityRatio between the consumption footprint of the top 20% vs bottom 20% of the income distribution1.81.8 (2021)2.7 (2021) 
 
      
 
 
  
 
PRODUCTIVITY 
ANNEX 9: RESOURCE PRODUCTIVITY, EFFICIENCY AND CIRCULARITY 

The green transition of industry and the built 
environment,  in  particular  decarbonisation, 
resource  efficiency  and 
is 
Germany’s 
essential 
competitiveness.  In  this  regard,  the  priority  for 
Germany 
increase  the  use  of  circular 
materials in industry and construction (87). 

circularity, 

boost 

is  to 

to 

Germany  is  on  track  to  achieve  the  EU 
Circular Economy Action Plan goals thanks to 
efficient  waste  management  and 
its 
competitive  environmental  goods  industry. 
Between  2016  and  2022,  the  material  footprint 
hovered  slightly  below  the  EU  average,  reaching 
14.5  tonnes  per  capita.  By  contrast,  Germany 
produces  less  waste  per  capita  than  the  EU 
average – 4.8 tonnes per capita in 2020. However, 
waste  production  increased  between  2014  and 
2018. 

Graph A9.1: ETS emissions by sector since 2013 

Source: European Commission 

(ETS) 

system 

trading 

In  2023,  the  sectors  covered  by  the  EU 
in 
emissions 
Germany (88)  emitted  17%  less  greenhouse 
gases  than  in  2019.  In  2023,  63%  of  the 
greenhouse  gases  emitted  by  Germany’s  ETS 
from  power  generation, 
installations 
significantly  more  than  the  EU  average  (57%). Of 
the total emissions from all industry sectors, about 
31%  came  from  the  metals  industry,  22%  from 
cement and lime production, 18% from refineries, 
and 22% from the chemical industry. Another 17% 
came from other industries. Since 2019, the power 

came 

(87)  See also Annexes 6, 7 and 12. 

(88)  This analysis excludes air travel. For more details and the 
data sources, see Weitzel, M; van der Vorst, C. (2024), 
Uneven progress in reducing emissions in the EU ETS, JRC 
Science for policy brief, JRC138215, Joint Research Centre. 

48 

sector has registered a higher reduction (24%) (89) 
than  the  industry  sectors  (14%).  Since  2013, 
greenhouse  gas  emissions  have  declined  by  48% 
in  power  generation  and  by  16%  in  the  industry 
sectors.  Nearly  all  of  this  decline  in  the  industry 
sectors has occurred since 2019.   

Despite  the  overall  positive  trends,  there  is 
still  room  for  boosting  Germany’s  industrial 
efficiency. Circular material  use is slightly above 
the EU average rate and measured 13% in 2022, 
far  behind  the  EU  leaders.  Similarly,  resource 
productivity  stood  above  the  EU  average  and 
reached  2.99  purchasing  power  standards  per 
kilogram in 2022. Resource productivity expresses 
how  efficiently 
the  economy  uses  material 
resources  to  produce  wealth.  Improving  resource 
productivity  can  help  minimise  negative  impacts 
on  the  environment  and  reduce  dependence  on 
volatile 
raw  material  markets.  Furthermore, 
Germany was dependent on imports for 36.5% of 
materials used in 2022, above the EU  average of 
22.4%,  making  the  country  comparatively  more 
vulnerable to supply chain disruptions. 

Strong  eco-innovation  performance  has 
helped  to  develop  a  highly  competitive 
environmental  goods  industry.  Germany  is  an 
eco-innovation  leader  according  to  the  2022 
Eco-Innovation  Scoreboard,  on  which  the  country 
ranked  sixth  with  a  score  of  141.2.  As  of  2023, 
Germany  totalled  391  EU  Ecolabel  licences  and 
9 212  EU  Ecolabel  products,  which  makes 
Germany  the  second  and  fourth  Member  for  EU 
Ecolabel licences and products, respectively. These 
numbers are higher than in previous years.   

is  among  the  top  performers 
Germany 
regarding  waste  management  but  produces 
far  more  waste  than  the  EU  average. 
Germany  ranked  first  in  the  EU  for  municipal 
waste  recycling  and  reached  a  rate  of  69.1%  in 
2022.  The  country  is  on  track  to  meet  the  2025 
recycling and the 2035 landfilling targets. In 2021, 
the  recycling  rates  of  plastic  packaging  and  e-
waste were both above the EU average, at 48.4% 
and  86.1%,  respectively.  Germany  is  the  country 
registering the highest number of patents on  

(89)  This includes a steep decrease of 15% year-on-year in 2020, 

and a gradual rebound in the next 2 years. 

00.20.40.60.8105010015020025030035040045020132014201520162017201820192020202120222023Emissions relative to 2013Mt CO2eCement & LimeChemicalsMetalsRefineriesPower generationOtherGermany (both axes) 
 
 
  
 
 
 
waste recycling per year, totalling 46 new patents 
in 2020, almost a quarter of the EU total.  

214 kg per capita – and treated 91.1% of it. 

There  is  still  room  to  improve  the  waste 
performance  of  the  construction  sector. 
Waste generated from construction and demolition 
activities  per  capita  is  among  the  highest  in  the 
EU.  It  reached  approximately  89  million  tonnes  in 
2020,  the  highest  amount  in  the  EU.  Backfilling 
has  slightly  decreased  since  2018  and  stood  at 
7.2% in 2020, below the EU average of 9.9%. The 
recovery  rate  remained  stable  at  approximately 
94%,  meeting  the  Waste  Framework  Directive’s 
target for 2020 and exceeding the EU average.  

Land  take  is  one  of  the  main  drivers  of 
biodiversity  loss  in  Germany.  The  soil  sealing 
index’s  sealed  area  covers  5.1%  of  its  territory, 
and  sealed  area  per  capita  is  above  the  EU 
average.  Land  take  mostly  occurs  in  cities  and 
their  commuting  zones,  where  arable  land  is  the 
most  affected.  Some  German  cities  report  good 
shares  of  land  recycling  and  densification.  For 
example,  between  2006  and  2012,  recycled  or 
densified  land  accounted  for  66%  and  23%  of 
total  land  consumption  in  Weimar  and  Berlin, 
respectively. There is room to make more efficient 
use  of  buildings.  Germany’s  residential  floor  area 
per capita slightly increased from 52.8 to 53.9 m2 
between  2018  and  2020,  which  remains  slightly 
below  the  EU  average  of  54.4  m2.  Furthermore, 
Germany  presents 
fourth-highest  non-
the 
residential floor area per capita (27.6 m2). 

Graph A9.2: Treatment of municipal waste 

Source: Eurostat 

remained 

(EUR’10) (90)  have 

There is still room to make better use of the 
potential  of  the  circular  economy  transition 
to make industry less polluting. The impact of 
particulate  matter  emissions  from  industry  on  air 
quality  was  lower  than  the  EU  average.  Over  the 
years,  the  grams  of  PM2.5  emitted  per  economic 
output 
stable, 
reaching  0.02  in  2020,  versus  an  EU  average  of 
0.07.  PM10  emissions  show  a  similar  trend,  with 
0.04  grams/EUR’10  versus  an  EU  average  of  0.1 
grams/EUR’10  in  2020.  Moreover,  between  2010 
and  2021,  Germany’s  industrial  sector  decreased 
its  emissions  of  main  pollutants  into  the  air  and 
was among the top 5 performers for the reduction 
of heavy metals (cadmium, mercury, and lead). In 
2020,  Germany  produced  282 kg  of  hazardous 
waste  per  capita  –  above  the  EU  average  of 

Table A9.1:  Circularity indicators 

(90)  In 2010 prices. 

Source: Eurostat, European Environment Agency 

49 

606609641651593010020030040050060070020182019202020212022Kg per capita Waste treatment to be determinedLandfill/disposalTotal incineration (including energy recovery)Composting and digestionMaterial recyclingEU-27201820192020202120222023EU-27Latest yearIndustryResource productivity (purchasing power standard (PPS) per kilogram)2.52.62.72.73.0-2.52022Circular material use rate (%)12.112.512.912.713.0-11.52022Eco-innovation index (2013=100)123.2128.4130.9135.8141.2-121.52022Recycling of plastic packaging (%)46.443.346.248.4--40.72021Cost of air emissions from industry (EUR bn)110.292.184.794.6--352.72021Built environmentRecovery rate from construction and demolition waste (%)------89.02020Soil sealing index (base year = 2006)102.7-----103.42018Non-residential floor area (m2 per capita)27.127.327.6---18.02020Waste backfilled (%)7.7-7.2-6.0-9.92020 
     
 
 
 
      
 
ANNEX 10: DIGITAL TRANSFORMATION 

its 

for 

targets 

Digital  transformation  is  key  to  ensuring  a 
resilient and competitive economy. In line with 
the  Digital  Decade  policy  programme,  and  in 
particular  with 
digital 
transformation  by  2030,  this  Annex  describes 
Germany’s  performance  on  digital  skills,  digital 
infrastructure/connectivity and the digitalisation of 
businesses  and  public  services.  Where  relevant,  it 
makes  reference  to  progress  on  implementing 
Germany's  recovery  and  resilience  plan  (RRP). 
Germany  allocates  48%  of  its  total  Recovery  and 
Resilience 
digital 
(EUR 13.5 billion) (91).  Under  cohesion  policy,  an 
additional  EUR 2.3 billion  (12%  of  the  country’s 
total  cohesion  policy  funding)  is  allocated  to  the 
country’s digital transformation (92). 

Facility 

budget 

to 

The  Digital  Decade  policy  programme  sets 
out a pathway for the EU’s successful digital 
transformation  by  2030.  Germany's  national 
roadmap outlines the actions it intends to take to 
reach the objectives and targets at national  level. 
The first report on the state of the Digital Decade 
highlighted the need to accelerate and deepen the 
collective efforts to reach the EU-wide targets and 
objectives (93).  Through  this,  a  digitally  skilled 
population 
the  development  and 
adoption  of  digital  technologies  and  leads  to 
productivity  gains  and  new  business  models.  It 
also  leads  to  higher  inclusion  and  participation  in 
an environment increasingly shaped by the digital 
transformation (94). 
technologies, 
infrastructure  and  tools  all  play  a  role 
in 
addressing 
the  current  structural  challenges, 
including  strategic  dependence  in  various  areas, 
cybersecurity and climate change. 

increases 

Digital 

Germany has a mixed performance on digital 
skills.  The  country  scores  below  the  EU  average 

(91)  The share of financial allocations that contribute to digital 
objectives has been calculated using Annex VII to the 
Recovery and Resilience Facility Regulation. 

(92)  This amount includes all investment specifically aimed at or 
substantially contributing to digital transformation in the 
2021-2027 cohesion policy programming period. The source 
funds are the European Regional Development Fund, the 
Cohesion Fund, the European Social Fund Plus, and the Just 
Transition Fund. 

(93)  European Commission, 2023, Report on the state of the 

on  basic  digital  skills,  but  above  average  for  the 
percentage  of  ICT  specialists  and  it  matches  the 
EU average for female ICT specialists. The German 
RRP includes several measures that support digital 
skills  and  notably  digital  education,  such  as 
investment in digital devices for teachers, which is 
almost fully implemented in the Länder.  

Very high capacity network (VHCN) coverage 
in  rural  areas  and  fibre  coverage  in  general 
remain  a  challenge  for  Germany.  Despite 
recent improvements, Germany is still much below 
the EU average for VHCN in rural areas (37.6% (95) 
compared to  a  55.6%  EU average in  2023).  Fibre 
coverage overall (where Germany is second last in 
the  EU),  and  in  rural  areas  in  particular,  is 
increasing  quickly,  but  it  remains  considerably 
below the EU average (29.8% vs 64% overall and 
25.6%  vs  52.7%  in  rural  areas).  Germany  scored 
above  the  EU  average  in  overall  5G  coverage  in 
2023  (98%  vs  89%).  The  German  RRP  does  not 
include  measures  to  support  the  deployment  of 
fibre  connections,  but  the  Federal  Government 
allocated  EUR 12 billion (96)  for  this  purpose.  In 
July  2022,  a  gigabit  strategy  was  adopted (97), 
which includes goals of 15 million new fibre to the 
premises  (FTTP)  connections  by  the  end  of  2025, 
and  to  make  FTTP  connections  available  for  all 
German  households  by  2030.  The  strategy  sets 
out  measures  that  simplify,  digitalise  and  speed 
up  permit-granting  procedures,  and  also  support 
the  use  of  alternative  deployment  methods.  A 
revised  funding  programme  came  into  effect  in 
2023. These measures are expected to accelerate 
fibre deployment in Germany. 

Germany’s  performance  on  digitalisation  of 
businesses  is  slightly  above  the  EU  average. 
Germany  scores  above  the  EU  average  for  most 
indicators  in  this  area,  e.g.  digital  intensity  for 
SMEs and the share of enterprises that have taken 
up at least one of the following three technologies: 
artificial  intelligence,  cloud  or  big  data (98).  Only 
the  uptake  of  cloud  computing  services  is  just 

(95)  European Commission, 2024, Digital Decade DESI 

Visualisation Tool, ec.europa.eu. 

(96)  Bundesministerium für Digitales und Verkehr (BMDV), 2024, 

Die Gigabitförderung 2.0, bmdv.bund.de. 

Digital Decade 2023, ec.europa.eu. 

(97)  BMDV, 2022, Gigabitstrategie der Bundesregierung 

(94)  See for example: OECD, 2019, OECD Economic Outlook, 

verabschiedet, bmdv.bund.de. 

Digitalisation and productivity: A story of complementarities, 
oecd-ilibrary.org; OECD, 2019, Going Digital: Shaping Policies, 
Improving Lives – Summary, oecd.org. 

(98)  See the new ‘AI or Cloud or Big data’ indicator, which (as of 
this year) is used to measure the progress towards the 
respective Digital Decade target. 

50 

 
 
 
 
 
below the EU average (38.5% vs 38.9% in 2023). 
The  German  RRP  includes  several  measures  to 
support  the  digitalisation  of  enterprises  and  the 
development  and  integration  of  advanced  digital 
technologies.  German  cohesion  policy  funds  also 
support  total  investments  for  digitalisation  in 
enterprises with around EUR 500 m in 2021-2027. 
These  measures  include,  as  important  projects  of 
common European interest, Next Generation Cloud 
Infrastructure  and  Services,  and  Microelectronics 
and  Communication  Technologies.  For  the  latter, 
the  content design  of the project  was  already  set 
out.  In  2022,  3.9%  of  enterprises  in  Germany 
reported  ICT  service  outage  due  to  cyberattacks 
(e.g. 
ransomware  attacks,  denial  of  service 
attacks). Over the same year, 23.9% of enterprises 
developed  or  reviewed  their  ICT  security  policy 
within 
Public 
administration,  which  should  be  the  trigger  of 
digitalisation,  is  lagging  behind  in  this  respect, 
which  is  a  hindrance  also  for  the  digitalisation  of 
businesses. (99) 

12  months. 

previous 

the 

of 

Control 

improve 

services, 

is  starting  to 
public 

Germany 
in  the 
but 
digitalisation 
implementation  remains  slow  and  a  crucial 
reform  issue.  The  country  scores  slightly  below 
the  EU  average  on  the  provision  of  digital  public 
services  for  businesses  and  for  citizens.  Germany 
has  three  electronic  identification  (eID)  schemes, 
at level of assurance ‘high’, that are notified under 
to 
the  eIDAS  Regulation.  Regarding  access 
electronic  health  records,  Germany  scores  87  out 
of  100,  above  the  EU  average.  The  National 
Regulatory 
acknowledges 
Germany’s  work  on  the  digitalisation  of  its  public 
administration  but  considers  that  the  country  is 
regards  quantifiable 
still 
lagging  behind  as 
results (100). The  German  RRP 
includes  several 
measures to support the implementation of digital 
public  services,  which  are  expected  to  improve 
performance in this area. These measures account 
for  more  than  50%  of  digital  investments  under 
the plan. The Digital Pension Overview Act entered 
into  force  and  a  pilot  project  for  the  European 
identity  ecosystem  was  launched.  The  first  target 
regarding  go-live  of  online  access  act  service 
bundles was achieved. 

Council 

(99)  German Chamber of Commerce, Digitalisierungsumfrage 

2023, dihk.de. 

(100) National Regulatory Control Council, 2021, Monitor Digitale 

Verwaltung #6, normenkontrollrat.bund.de. 

51 

 
 
Table A10.1:Key Digital Decade targets monitored by the Digital Economy and Society Index indicators 

(1) The 20 million target represents about 10% of total employment. 
(2) The fibre to the premises coverage indicator is included separately as its evolution will also be monitored separately and taken 
into consideration when interpreting VHCN coverage data in the Digital Decade. 
(3) At least 75% of EU enterprises have taken up one or more of the following, in line with their business operations: (i) cloud 
computing services; (ii) big data; (iii) artificial intelligence. 

Source: Digital Economy and Society Index 

52 

EUDigital Decade target by 2030 2022202320242024(EU)Digital skillsAt least basic digital skills49%49%52%56%80%% individuals20212021202320232030ICT specialists (1)4.9%5.0%4.9%4.8%20 million% individuals in employment aged 15-7420212022202320232030Digital infrastructure/connectivityFixed very high capacity network (VHCN) coverage75%70%75%79%100%% households20212022202320232030Fibre to the premises (FTTP) coverage (2)15%19%30%64%-% households2021202220232023Overall 5G coverage87%93%98%89%100%% populated areas20212022202320232030Digitalisation of businessesSMEs with at least a basic level of digital intensity59%NA61%58%90%% SMEs2021202320232030Data analyticsNANA37%33%-% enterprises20232023Cloud32%32%39%39%-% enterprises2021202120232023Artificial intelligence11%11%12%8%-% enterprises2021202120232023AI or cloud or data analytics (3)NANA58%55%75%% enterprises202320232030Digitalisation of public servicesDigital public services for citizens76787679100Score (0 to 100)20212022202320232030Digital public services for businesses80817985100Score (0 to 100)20212022202320232030Access to e-health recordsNA708779100Score (0 to 100)2022202320232030Germany 
 
 
 
 
      
 
 
ANNEX 11: INNOVATION 

This  Annex  provides  a  general  overview  of 
the  performance  of  Germany’s  research  and 
innovation  system,  which 
is  essential  for 
delivering  the  twin  transition  and  ensuring  long-
term competitiveness. 

Germany  is  a  ‘strong  innovator’,  but  its 
performance  decreased  relative  to  the  EU 
average.  According  to  the  2023  edition  of  the 
European Innovation Scoreboard (101) its innovation 
performance  increased  by  7.6  percentage  points 
since 2016, at a lower rate than the EU’s (8.5pp). 
However,  its  overall  performance  remains  above 
the EU average (117.8%). 

intensity (102) 

is  key 
research  and 
industrial 

In  2022,  R&D 
in  Germany 
reached  3.13%  and is above  the  EU’s  target 
of 3%. Nevertheless, R&D intensity has stagnated 
below  Germany’s  own 
target  of  3.5%  for 
2025 (103). The commitment to this target, as well 
as  sufficient  funding  for  green  and  digital 
to  continuously  producing 
research, 
innovation  outputs, 
excellent 
transformations (104). 
facilitating 
Although  Germany  has  one  of  the  world’s  most 
advanced  R&I 
these 
challenges,  a  more  agile  and  experimental 
approach  to  R&I  policy  is  needed.  Together  with 
the recently adopted ‘SPRIND-Freiheitsgesetz’ (105), 
thorough implementation of the mission approach 
is  important  to  ensure  a  holistic  attitude  to  R&I 
governance (106). 

to  address 

systems 

the 

German companies contribute significantly to 
R&D funding but R&D expenditure in SMEs is 
enterprise 
still 

subdued.  While 

business 

(101) European Commission, 2023, European Innovation 

Scoreboard (EIS), country profile: Germany, ec.europa.eu. The 
EIS provides a comparative analysis of innovation 
performance in EU countries (also compared to the EU 
average). 

(102) Defined as gross domestic expenditure on R&D as a 

percentage of GDP. 

(103) The 3.5% R&D intensity target has been reiterated in 

Germany’s Future Research and Innovation Strategy (2023). 

(104) Expertenkommission Forschung und Innovation, 2022, 

Gutachten zu Forschung, Innovation und Technologischer 
Leistungsfähigkeit Deutschlands 2022, e-fi.de.  

(105) This new law aims at improving the framework conditions of 

last  decade.  This 

expenditure on R&D as % of GDP is well above the 
EU  average  (2.11%  vs  1.48%),  SMEs’  share  of 
business  R&D  expenditure  is  very  low  (0.20%  in 
2021,  compared  to  0.45%  EU  average),  with  no 
growth 
is 
in 
issue 
the 
(up  to  50 
in  small  enterprises 
exacerbated 
employees), which spend half as much on R&D as 
medium-sized 
250 
employees) (107).  Tax  support  for  R&D  expenditure 
further 
was 
strengthened  with  the  Growth  Opportunities  Act 
providing  higher  subsidy  rates  for  SMEs (108). 
Additionally,  Germany's  recovery  and  resilience 
(RRP)  and  cohesion  policy  programmes 
plan 
include  several  measures 
to  support  SME 
innovation  to  enhance  digitalisation  and  the 
decarbonisation of industry. 

in  2020  and 

enterprises 

introduced 

(up 

to 

is 

Graph A11.1: SMEs' share of R&D expenditure 
2021 and development between 2010-2021 

(1) Compound annual growth refers to growth between the 
earliest available year and the latest available year for which 
compatible data are available over the period. 
Source: Eurostat 

The German venture capital market has been 
gradually  expanding  in  recent  years  but 
remains  small  in  international  terms.  The 
country’s venture capital increased between 2020 
and  2022  (from  0.054%  to  0.087%  of  GDP),  and 
is  above  the  EU  average  (0.085%  in  2022). 
Despite  this  positive  trend,  Germany  lags  behind 
international  benchmarks, notably the  UK  and  US, 
indicating market deficiencies in its venture capital 
sector (109).  Addressing 
requires 
continuous  effort.  In  this  regard,  the  ‘INVEST  – 
Grant  for  Venture  Capital’  programme plays  a 
crucial  role  in  assisting  young  and  innovative 
companies  by  facilitating  capital  acquisition.  The 

issues 

these 

(107) KfW Research, 2022, KfW SME Innovation Report, kfw.de. 

the Federal Agency for Leap Innovations (SPRIND). 

(108) Bundesregierung, 2024, Growth Opportunities Act, 

(106) Expertenkommission Forschung und Innovation, 2024, 

Gutachten zu Forschung, Innovation und Technologischer 
Leistungsfähigkeit Deutschlands 2024, e-fi.de. 

bundesregierung.de. 

(109) BMWK, 2024, INVEST – Zuschuss für Wagniskapital, 

bmwk.de. 

53 

-6.0-3.00.03.06.09.012.015.018.021.024.0-0.20-0.100.000.100.200.300.400.500.600.700.800.901.00BEFIATSISEEENLPTDKLTHUFRESCZMTIECYPLELHRBGITSKDELULVROEUGrowth rate as % 2010-2022% of GDP in 2021Business enterprise expenditure on R&D (BERD) performed by SMEs as % of GDPCompound annual growth 2010-2021 as % (1) 
 
 
  
 
 
Table A11.1:Key innovation indicators 

(1) EU average for the last available year or the year with the largest number of country data. 
Source: Eurostat, OECD, DG JRC, Science-Metrix (Scopus database and EPO’s Patent Statistical database), Invest EU 

‘Future  Fund’,  another  instrument  in  support  of 
SMEs (110),  received  EUR 10 billion  to  foster  the 
venture capital market. However, the proportion of 
venture capital  available for early-stage start-ups 
is significantly higher than the proportion for later-
stage  venture  capital.  This  gap  in  growth  and 
later-stage  capital  has  prompted  promising 
from 
German 
international investors (111). 

start-ups 

support 

seek 

to 

The  shortage  of  skilled  workers  impacts  the 
innovation  capacity.  Companies 
country’s 
affected  by  the  shortage  of  skilled  workers  (see 
Annex  14)  are  finding  it  increasingly  difficult  to 
carry  out  innovative  projects  due  to  the  lack  of 
expertise  and  capacity,  resulting  in  a  loss  of 
innovation  strength (112).  Women  continue  to  be 
significantly  underrepresented  in  R&I  in  Germany. 
The  share  of  female  researchers  has  remained 
crucially  low  and  is  one  of  the  main  structural 

(110) BMWK, 2022, Future Fund, bmwk.de. 

(111) OECD, 2022, Innovation Review: Germany 2022, oecd-

ilibrary.org. 

(112) ZEW, 2022, Innovationserhebung, zew.de. 

its 

skilled 

weaknesses  of  Germany’s  R&I  system (113).  To 
overcome  the  shortage  of  skilled  labour,  the 
Federal  Government, 
labour 
in 
strategy (114), plans to improve the quality of work 
and to facilitate the immigration of skilled workers 
by  offering  better  conditions.  Also,  the  German 
Bundestag  adopted  a  draft  law  on  the  further 
development of skilled immigration. There remains 
further  need  to  increase  the  transparency  of 
academic  career  paths  and  to  find  a  balance 
between  predictability  and  flexibility  (e.g.  to  work 
outside  academia)  for  doctoral  and  post-doctoral 
researchers (115). 

(113) OECD, 2022, Innovation Review: Germany 2022, oecd-

ilibrary.org. 

(114) BMAS, 2022, Fachkraeftestrategie der Bundesregierung, 

bmas.de. 

(115) Expertenkommission Forschung und Innovation, 2023, 

Gutachten zu Forschung, Innovation und Technologischer 
Leistungsfähigkeit Deutschlands 2023, e-fi.de. 

54 

EUaverage (1)R&D intensity (GERD as % of GDP)2.732.933.133.133.132.24Public expenditure on R&D as % of GDP0.90.921.041.030.950.73Business enterprise expenditure on R&D (BERD) as % of GDP1.832.012.092.092.111.48Scientific publications of the country within the top 10% most cited publications worldwide as % of total publications of the country 11.311.110.28::9.6Patent Cooperation Treaty patent applications per billion GDP (in PPS)7.76.55.77::3.4Public-private scientific co-publications as % of total publications9.810.311.211.311.77.6Public expenditure on R&D financed by business enterprise (national) as % of GDP0.1050.1170.1210.111:0.054New graduates in science & engineering per thousand pop. aged 25-3415.117.117.618.5:16.9Total public sector support for BERD as % of GDP:0.082:0.083:0.204Share of environment-related patents in total patent applications filed under Patent Cooperation Treaty (%)17.114.315.5: :14.7Venture capital (market statistics) as % of GDP0.0320.0260.0540.0780.0870.085Employment share of high-growth enterprises measured in employment (%):12.0312.3::12.512022Finance for innovation and economic renewalKey indicators Quality of the R&I systemAcademia-business cooperationHuman capital and skills availabilityPublic support for business enterprise expenditure on R&D (BERD)Green innovation 2021Germany201020152020 
 
 
 
   
 
ANNEX 12: INDUSTRY AND SINGLE MARKET 

in 

the 

The German economy has a strong industrial 
base,  but  external  factors  and  structural 
weaknesses  weigh  on 
its  growth  and 
competitiveness.  Germany  has  been  gradually 
losing  ground  in  international  competitiveness 
rankings.  For  example, 
IMD  World 
Competitiveness Ranking Germany has fallen from 
6th to 22nd in less than a decade (116). In its latest 
annual  report,  the  German  Council  of  Economic 
Experts identifies as key obstacles in particular an 
ageing  population,  declining  productivity  growth 
and  ageing  capital  stocks,  which  are  expected  to 
weigh significantly on competitiveness and growth 
in  the  coming  decades  and  have  not  yet  been 
sufficiently addressed. As a result, potential output 
growth  in  Germany  is  expected  to  sink  to  an  all-
time  low,  averaging  0.4%  annually  from  2023  to 
2028 (117).  Addressing  Germany’s 
structural 
challenges  has  become  even  more  important  for 
maintaining Germany’s competitiveness.  

Increased  energy  prices,  which  were  already 
high compared with international peers, have 
put  further  pressure  on  energy-intensive 
sectors.  The 
five  most  energy-consuming 
industrial  sectors  together  accounted  for  77%  of 
total  industrial  energy  consumption  and  about 
17% of industrial gross value added in 2021. They 
are  part  of  complex  value  chains  and  provide 
important  intermediate  goods  for  other  industrial 
sectors. In January 2024, the production index was 
still  about  17.6%  lower  than  two  years  ago (118). 
Production 
industries  has 
declined considerably since the beginning of 2022, 
but seems to have stabilised, as energy costs have 
meanwhile  returned  to  pre-crisis  levels (119).  The 
electricity  price  package  adopted  in  December 
2023 
to 
manufacturring  companies,  including  in  energy-
intensive  sectors,  to  support  them  in  their  green 
transition (120) (Annex 7).  

in  energy-intensive 

additional 

provided 

support 

(116) IMD International Institute for Management Development, 

2023, World Competitiveness Ranking, imd.org. 

(117) German Council of Economic Experts, 2023, Annual Report 

is 

largest 

vehicles. 

industry, 

leading  car-exporting  country. 

industrial  sector,  the 
Germany’s 
fierce 
facing 
automotive 
in  electric  and 
competition,  particularly 
software-defined 
car 
German 
manufacturers  have  been  gradually  shifting  parts 
of their production to China as its importance as a 
sales  market  increases.  Almost  every  third  car 
worldwide is sold in China and it has also become 
In  2023, 
the 
production increased by about 20% to almost 3.9 
million cars, but despite the recovery, output is still 
below  the  pre-crisis  level.  Around  524 000  new 
battery-powered  electric  vehicles  were  registered 
in  2023,  an  increase  of  11.4% (121).  In  2022,  the 
number of new registrations increased by 30%. An 
important  factor  was  the  government  grant  for 
electric  cars.  Since  2016,  around  EUR  10  billion 
has  been  disbursed  under  the  environmental 
scheme  for  the  purchase  of  about  2.1  million 
electric  vehicles,  including  up  to  560 000  electric 
vehicles  supported  by  the  German  recovery  and 
resilience plan (RRP).  The funding programme has 
made a decisive contribution to electric mobility in 
Germany.  However,  the  measure  was  phased  out 
at  the  end  of  2023,  a  year  earlier  than 
planned (122). 

industry 

industry 

in  particular 

is  facing  a 
The  construction 
considerable  decline  in  new  projects  on  the 
back of high construction costs and subdued 
investor  and  consumer  confidence.  The 
is  under 
housebuilding 
pressure due to lagging and cancelled new orders 
and  high  construction  costs (123).  In  2023,  the 
number  of  building  permits  for  homes  decreased 
by  26.6%  compared  to  the  previous  year.  As  a 
result,  the  federal  government’s  objective  of 
building  400 000  new  homes  a  year  has  again 
been  missed.  In  November  2023,  the  federal 
government and the regions agreed on a ‘Pact for 
acceleration 
and 
planning, 
implementation’ (124). It aims to speed up and fully 
digitalise  planning  and  authorisation  procedures, 
and  remove  certain  bureaucratic  obstacles  to 

approval 

of 

2023/24, sachverstaendigenrat-wirtschaft.de. 

(121) Kraftfahrt Bundesamt, 2024, Fahrzeugzulassungen im 

(118) Statistisches Bundesamt, 2024, Bedeutung der 
energieintensiven Industriezweige, destatis.de.  

(119) Bundesverband der Energie- und Wasserwirtschaft, 2024, 
Strompreis Entwicklung in Deutschland für Haushalte und 
Industrie, bdew.de. 

Dezember 2023 – Jahresbilanz, kba.de. 

(122) BMWK, 2023, Umweltbonus endet mit Ablauf des 17. 

Dezember 2023, bmwk.de. 

(123) Statistisches Bundesamt, 2024, Branchen und Unternehmen: 

Bauen, destatis.de. 

(120) Bundesregierung, 2023, Strompreispaket für produzierende 

(124) Bundesregierung, 2023, Agreement on migration and Pact 

Unternehmen, bundesregierung.de. 

for Germany, bundesregierung.de. 

55 

 
 
 
 
construction.  First  results  are  expected  in  early 
2024, but effective implementation at all levels of 
administration, including at regional and municipal 
level, remains a challenge. 

roll-out  of 

industrial  strategy  actively 
The  German 
supports the green transition of industry and 
the  accelerated 
renewable 
energies.  Through  a  combination  of  strategic 
government  intervention  and  collaboration  with 
industry,  Germany  has  been  able  to  develop  a 
leading  position  in  several  key  industrial  sectors, 
including  automotive,  engineering  and  chemicals 
production.  Germany’s  updated  industrial  policy, 
published 
in  October  2023,  places  a  strong 
emphasis  on  sustainability  by  promoting  the  shift 
resource 
renewable  energy  sources, 
towards 
technologies (125).  The 
efficiency  and 
government has actively promoted the adoption of 
advanced 
the  manufacturing 
sector.  Subsidies  for  strategic  investments,  for 
example as part of important projects of common 
European 
field  of 
(IPCEIs) 
microelectronics, battery cell manufacturing, cloud 
chips 
infrastructure  and  hydrogen  or 
manufacturing as part of the European Chips Act, 
aim  to  ensure  that  German  industry  has  also  a 
strong  position 
transformation 
technologies. 

technologies 

innovative 

interest 

clean 

the 

in 

in 

in 

in 

(SMEs) 

enterprises 

education  and  boosting  entrepreneurship. 
While the level of labour productivity remains high, 
at 121.9% of the EU average in 2022, the growth 
rates for both labour productivity and total  factor 
productivity  have  been  slowing  down  in  recent 
years (Graph A12.1). Productivity in manufacturing 
is  still  performing  better  than  in  services  and 
construction  (Graph  A12.2).  Germany  scores  high 
on  many  indicators  related  to  innovation  and 
technology diffusion, but R&D investment of small 
and  medium-sized 
is 
comparatively  low (Annex  11).  The  share  of  high-
growth firms and the rate of new firms are below 
the  EU  aggregate  and  declining.  Moreover,  the 
recent  economic  slowdown  is  also  holding  back 
in  digitalisation (126).  Productivity 
investment 
growth  could  equally  be  strengthened  through 
improved  education  outcomes,  further  progress in 
digitalisation and innovation and by facilitating the 
scale-up of young and innovative firms. The main 
long-term  barriers  to  investment  reported  by 
German  firms  are  the  availability  of  skilled  staff 
(92%),  energy  costs  (89%)  and  uncertainty  about 
the future (77%) (127). As in many other countries, 
the  lack  of  skills  and  workforce  has  become  a 
major  bottleneck.,  but  the  situation  is  particularly 
pronounced in Germany and affects the digital and 
green transition (Annexes 14 and 15).  

Graph A12.1: Total factor productivity 

Graph A12.2: Productivity by sector 

Source: AMECO 

Productivity growth could be strengthened by 
further progress in digitalisation, investing in 
new  technologies  and  innovation,  improving 

Source: AMECO 

Germany  is  among  the  front  runners  in 
patent  applications,  including  those  for  net-
zero  technologies.  Germany  ranks  fifth  among 
EU Member States in terms of patent applications 
submitted to the European Patent Office. It shows 
its innovation and technological prowess in several 

(126) BMWK, 2023, Digitalisierungsindex 2023, de.digital.    

(125) BMWK, 2023, Industriepolitik in der Zeitenwende, bmwk.de.   

(127) EIB, 2023, Investment Survey 2023: Germany, eib.org. 

56 

9010011006070809101112131415161718192021222324*25*(2010=100)DEFRESITEA20901001101201302015201620172018201920202021202220232015 = 100Agriculture, forestry and fishingIndustry (except construction)ConstructionWholesale and retail trade, transport, accommodation and food service activitiesInformation and communicationFinancial and insurance activitiesProfessional, scientific and technical activities; administrative and support service activities 
      
 
   
 
apparatus, 

key  sectors  such  as  environmental  technology, 
energy, 
electrical  machinery, 
biotechnology  or  semiconductors (128).  Germany  is 
among the 17 Member States that became part of 
the unitary patent system launched in June 2023. 
The  system  enables  simple  patent  protection  in 
Europe, with a single procedure for the registration 
of patents and centralised litigation.  

framework 

interest  rates, 

Overall,  financing  conditions  for  firms  have 
tightened, and despite positive developments 
in  the  availability  of  venture  capital,  small 
and  innovative  companies  often  struggle  to 
scale up. Companies report a tightening of credit 
conditions  and  more  restrictive  bank  lending  on 
the  back  of  higher 
increased 
the  general  macroeconomic 
uncertainty  and 
situation (129).  Despite  positive  developments,  it 
still  lags  behind  European  and  international  peers 
on  venture  and  growth  capital  (Annex  11).  In  July 
the  German  government  adopted  a 
2022, 
comprehensive  start-up  strategy (130)  to  improve 
regulatory 
strengthen 
financing  for  start-ups  and  facilitate  spin-offs 
from science and universities. In 2024, it plans to 
provide EUR 11 billion in support to SMEs from the 
ERP  Special  Fund (131)  for  low-interest  financing 
and equity capital, which is 12% more than in the 
previous 
increased 
noticeably  in  2023  and the  first  quarter  of  2024, 
in  particular  in  the  real  estate  and  construction 
sector.  In  March  2024,  insolvencies  were  35% 
higher  than  one  year  before  and  30%  above  the 
average  for  the  years  2016  to  2019 (133).  The 
increase  is  partly  due  to  special  rules  during  the 
COVID-19 pandemic and particularly low levels of 
in  previous  years,  but  also  the 
insolvencies 
increasingly 
macroeconomic 
environment. 

Insolvencies 

challenging 

conditions, 

year (132). 

(128) European Patent Office, 2024, epo.org. 

(129) KfW, 2023, KfW-ifo-Kredithürde, kfw.de, 

ECB, 2023, Survey on the access to finance of enterprises, 
ecb.europa.eu. 

(130) BMWK, 2022, Startup roadmap ready: Federal Cabinet 
adopts first comprehensive startup strategy, bmwk.de.   

been 

value 

easing 

Recent 

chains. 

gradually, 

The federal government encourages industry 
to  diversify  and  strengthen  the  resilience  of 
strategic 
supply 
disruptions  have  revealed  Germany’s  vulnerability 
in  global  value  chains.  While  material  shortages 
have 
significant 
dependencies  persist  for  a  broad  range  of  raw 
materials  and  components,  including  critical  raw 
materials  necessary  for  the  green  and  digital 
transition.  For  more  than  half  of  the  critical  raw 
materials,  both  Germany  and  Europe  are 
dependent on imports of over 95% (including rare 
earth  elements).  However,  there  are  also  several 
raw  materials  for  which  Germany 
is  more 
imports  than  the  EU  average 
dependent  on 
lithium  and  silicon). (134)  While  the 
(including 
the  de-risking  and 
government  encourages 
diversification of German industry, in particular for 
strategic value chains, the available data does not 
show any substantial progress yet on this (135). 

such  as 

Germany  still  has  substantial  scope  to 
reduce  administrative  burden  for  SMEs, 
including 
through  better  digital  public 
services.  Further  progress  in  digitalisation  and 
digital  public  services  could  help  reduce  red  tape 
for firms. Germany has taken several measures to 
improve the business environment and reduce the 
administrative burden for SMEs, including through 
measures  under 
the 
the  RRP, 
modernisation of registers and implementation of 
the  Online  Access  Act.  Overall,  however,  progress 
on  the  digitalisation  of  public  services  has  been 
slow  (see  also  Annexes  10  and  13).  Federal  and 
regional authorities agreed to streamline planning 
effective 
procedures, 
and 
implementation  at  all  levels  of  administration, 
including at regional and communal level, remains 
a challenge (see also Annex 7). (136) In March 2024, 
the government presented the fourth bureaucracy 
relief act, which is expected to relieve citizens and 
firms  by  944  million  euros,  i.a.  by  reducing  the 
retention  period  for  accounting  documents  and 
abolishing several written form requirements. It is 
part  of  the  government's  de-bureaucratisation 
package  agreed  in  August  2023,  which  in  total 

permitting 

but 

(131) BMWK, 2024, ERP/Zukunftsfonds-Wachstumsfazilität, 

foerderdatenbank.de.    

(134) DIW, 2022, Deutschland kann seine Versorgungssicherheit 
bei mineralischen Rohstoffimporten erhöhen, diw.de.  

(132) BMWK, 2023, Mittelstandsförderung erreicht 2024 

(135) German Economic Institute, 2023, Is the derisking 

Rekordhöhe, bmwk.de.   

beginning?, iwkoeln.de. 

(133) Leibniz-Institut für Wirtschaftsforschung Halle (IWH), 2024, 

(136) BMWK, 2023, Kabinett beschließt Beschleuniger für Wind- 

Insolvenztrend, iwh-halle.de.   

und Netzausbau, bmwk.de. 

57 

 
 
 
aims  to  reduce  administrative  burden  by  around 
five billion euros per year (137).  

for 

indicates  scope 

Germany has scope for further improvement 
in implementing and enforcing Single Market 
rules.  While  its  trade  integration  in  the  Single 
Market  for  goods  is  above  the  EU  average,  it  is 
relatively  low  for  services.  The  Single  Market 
Scoreboard (138) 
further 
improvement,  for  example  regarding  ongoing 
infringement  cases.  While  the  total  number  of 
infringements  has  decreased  over  the  last  years, 
Germany  has  still  the  fifth  highest  number  of 
pending infringement cases in the EU, including in 
areas such as taxation, environment and transport, 
or  the  Professional  Qualifications  Directive  and 
Proportionality  Test  Directive.  Germany’s  SOLVIT 
centre,  which  helps  citizens  and  businesses  deal 
with  potential  breaches  of  EU  rights  in  other  EU 
countries,  would  benefit  from  additional  staff. 
Germany solved 95.2% of the SOLVIT cases (208) 
it handled as lead centre, above the EU average of 
88.3%.  However,  other  indicators  signal  a  less 
favourable picture, caused by the understaffing of 
the German SOLVIT centre (139). 

in 

for 

remain 

Germany’s 
public 
performance 
procurement  is  in  line  with  the  EU  average 
overall,  but  there  is  still  room  for  further 
improvement,  including  on  the  strategic  use 
of  public  procurement.  Different  policy  tools 
and  strategies  support  strategic  procurement  at 
national, sub-national and regional level. However, 
major  barriers 
their  effective 
implementation, mainly the lack of knowledge and 
capacity at local procurer level. Better quality data 
gathering and monitoring could encourage a wider 
uptake  of  sustainable  procurement  practices  and 
more effective policy implementation. The ongoing 
work  on  the  transformation  package  of  public 
procurement law aims to simplify, professionalise, 
digitalise  and  accelerate  public  procurement 
procedures.  It  aims  at  bringing  them  in  line  with 
obligations  under  the  EU  Directives,  while  further 
integrating  sustainability  criteria,  and  illustrates 
efforts  to  strengthen  the  strategic  use  of  public 
procurement.  In  2023,  a  national  notification 

(137) BMJ, 2024, Bürokratieentlastungsgesetz IV, bmj.de. 

(138) European Commission, 2024, Single Market Scoreboard, 

Performance Overview, ec.europa.eu. 

(139) European Commission, 2024, Single Market Scoreboard, 

for 

public 

contract 

service 
awards  was 
created (140).  It  centralises  data  on  tenders  from 
different platforms and improves the transparency 
of Germany’s procurement processes by publishing 
data  on  awarded  contracts  using  a  standard 
format.  This  could  finally  lead  to  a  progressive 
increase  in  competition  on  public  procurement 
markets after a decreasing trend in recent years.  

help 

boost 

competition 

Reducing  restrictive  regulation  in  services 
could 
and 
productivity  growth.  Restrictions  on  regulated 
professions  remain  high  compared  to  the  EU 
average for architects, civil engineers, accountants, 
tax  advisers,  patent  or  trademark  agents  and 
lawyers, despite some recent reforms on company 
ownership and multidisciplinary partnerships in tax 
and  legal  professions.  Exclusive  rights  to  provide 
tax  advice  and  legal  services  remain.  Reducing 
restrictive 
while 
safeguarding  quality  standards  and  consumer 
interests  could  also  help  boost  competition  and 
productivity (141).   

regulation 

services 

in 

is 

system  will  enable 

in  the  production  stage  of 
Germany 
implementing  the  components  needed  to 
connect  to  the  Once-Only  Technical  System 
(OOTS) (142). As part of the Single Digital Gateway 
Regulation (143), the 
the 
automated  cross-border  exchange  of  evidence 
between  competent  authorities,  improving  online 
access  to  information,  administrative  procedures 
and  assistance  within  the  EU.  The  onboarding  of 
German  competent  authorities  is  crucial  for  the 
system  to  function  smoothly  and  to  reduce 
administrative burden. 

(140) Der Beauftragte der Bundesregierung für 
Informationstechnik, 2024, cio.bund.de.  
Beschaffungsamt des BMI, 2024, bescha.bund.de 

(141) European Commission, 2021, Communication on updating 
the reform recommendations for regulation in professional 
services, COM(2021)385, eur-lex.europa.eu.  

(142) Implementing Regulation (EU) 2022/1463. 

Country data: Germany, ec.europa.eu.   

(143) Regulation (EU) 2018/1724. 

58 

 
 
 
Table A12.1:Industry and the Single Market 

Source: (1) AMECO, (2) Eurostat, (3) Single Market Scoreboard, (4) OECD, (5) ECFIN BCS, (6) COMEXT and Commission 
calculations, (7) EIB Investment Survey, (8) Intrum Payment Report, (9) SAFE survey, (10) EIF SME Access to Finance Index.  
* Own Commission calculations for the EU27 average  

59 

POLICY AREAINDICATOR NAME20192020202120222023EU27 average*Net Private investment, level of private capital stock, net of depreciation, % GDP12.81.91.71.71.43.8Net Public investment, level of public capital stock, net of depreciation, % GDP10.10.30.1001.2Real labour productivity per person in industry (% yoy)2-1.7-4.88.8-1-2.1-1.24Cost competitivenessNominal unit labour cost in industry (% yoy)24.12.8-5.248.49.83Single Market integrationEU Trade integration, % (Average intra-EU imports + average intra EU exports)/GDP222.921.023.325.523.542.9Transposition deficit, % of all directives not transposed30.60.60.4110.7Conformity deficit, % of all directives transposed incorrectly31.61.82.21.91.81.1SOLVIT, % resolution rate per country387.587.888.684.995.088.3Number of pending infringement proceedings3444748473925.9RestrictionsEEA Services Trade Restrictiveness Index40.060.060.040.040.040.05Single bids, % of total contractors3221920252328.6Direct Awards, %3466658.1Material Shortage (industry), firms facing constraints, %514.813.455.977.237.517.2Labour Shortage using survey data (industry), firms facing constraints, %518.810.023.538.833.523.3Vacancy rate, % of vacant posts to all available ones (vacant + occupied)23.552.63.54.84.32.5Concentration in selected raw materials, Import concentration index based on a basket of critical raw materials60.180.150.170.190.20.22Installed renewables electricity capacity, % of total electricity produced20.30.30.60.650Investment obstaclesImpact of regulation on long-term investment, % of firms reporting business regulation as major obstacle729.431.529.126.036.022.2Bankruptcies, Index (2015=100)281.168.560.563.376.2105.6Business registrations, Index (2015=100)288.377.379.078.196.0120.2Payment gap - corporates B2B, difference in days between offered and actual payment8-2012121415Payment gap - public sector, difference in days between offered and actual payment8-2411131516Share of SMEs experiencing late payments in past 6 months, %933.535.033.433.233.748.7EIF Access to finance index - Loan, Composite: SME external financing over last 6 months, index values between 0 and 1100.630.600.710.70-0.49EIF Access to finance index - Equity, Composite: VC/GDP, IPO/GDP, SMEs using equity, index values between 0 and 110 0.290.190.280.51-0.17Access to financeECONOMIC STRUCTUREShortagesStrategic dependenciesBUSINESS ENVIRONMENT - SMEsBusiness demographyLate paymentsPublic procurement GermanyHEADLINE INDICATORSEconomic StructureSINGLE MARKETCompliance 
 
   
 
ANNEX 13: PUBLIC ADMINISTRATION 

the 

economy’s 

Germany’s  public  administration  is  essential 
competitiveness, 
for 
especially  in  shaping  the  conditions  for  the 
twin  transitions  and  creating  a  favourable 
perceived 
business 
effectiveness  of  Germany’s  government  is  high 
compared  to  the  EU  average,  but  it  has  declined 
since 2018 (Graph A13.1).  

environment. 

The 

Graph A13.1: Government effectiveness 

Progress 
in  digitalisation  of  the  public 
administration  is  slow,  making  the  German 
public  administration  less  digitally  mature 
than the EU average. The German government is 
improving  digital  services 
in  the  process  of 
through  amendments  to  the  national  Online 
Access  Act (144).  The  reform promotes  user-centric 
digital  services  and  simplifying 
interactions 
individuals,  businesses,  and  the 
between  the 
government.  Germany  has  also  improved  the 
accessibility  of  online  content  with  Leichte 
Sprache (145).  Although 
of 
government  websites  has  increased  in  recent 
years, the average level of digital skills and overall 
maturity  of  e-government  are  lower  than  the  EU 
average  (Graph  A13.2).  Within  the  e-government 
indicator,  the  transparency  and  the  key  enablers 
dimension  have  the  most  room  for  improvement, 
relative to the EU-27 average (Graph A13.2b). The 
German  regional  and  local  public  administrations 
are  starting  to  simplify  procedures  and  reduce 
administrative  burden 
encourage  more 
investment.  

individuals’  use 

to 

Average value over 2018-2022 and change over 2018-2022. 
The GDP per head bar shows the mean value of the 
government effectiveness indicator for the group of EU 
countries belonging to the same GDP per head cluster as 
Germany (EU countries are ranked in terms of their GDP per 
head and grouped into three equally sized clusters). 
Source: Worldwide Governance Indicators 

Germany has taken small steps to reform its 
civil  service  management.  The  ratio  of  public 
administration employees aged 25 to 49 to those 
aged  50  to  64  is  below  the  EU  average  (Table 
A13.1).  The  participation  of  German  public 
administration employees in adult learning is also 
below the EU average as is gender parity in senior 
civil  service  management  positions  (Table  A13.1). 
Considering  these  circumstances,  the  German 
government  has  made  more  opportunities 
available  for  continuous 
learning  and  career 
development  and  promoted  a  good  work-life 
balance  through  flexible  working  hours  to  make 
the  public  administration  a  more  attractive 
employer. 

To  help  address  fiscal  challenges,  the 
Independent  Fiscal  Institution  (IFI)  could  be 
strengthened.  The  Advisory  Board  (AB)  has  a 
narrow  mandate,  only  formally  assessing  the 
government  macroeconomic 
forecast  without 
endorsing 
limited  budget.  The  policy 
it,  and 
dialogue with the government and the parliament 
could  be  improved  by  grounding  it  in  law,  which 
could also help improve its media presence. There 
is  also  room  for  improvement  when  it  comes  to 
access to information. 

The 
justice  system  performs  efficiently 
overall (146).  The  disposition  time  in  civil  and 
commercial litigious cases has slightly increased in 
recent  years  but  is  still  low  (241  days  in  2022). 
The  clearance  rate  remains  high  (104% in  2022). 
In  administrative  cases,  the  disposition  time  at 
first  instance  remains  high  (408  days  in  2022, 
compared to 422 in 2021) although the clearance 

(144) Bundesministerium des Inneren (BMI), n. d., The Online 

Access Act, digitale-verwaltung.de. 

(145) Bundesministerium des Inneren (BMI), n. d., Leichte Sprache, 

bmi.bund.de. 

(146) For more details, see: European Commission, 2024 

(forthcoming), EU Justice Scoreboard 2024, 
commission.europa.eu;  European Commission, 2024 
(forthcoming), 2024 Rule of Law Report, 
commission.europa.eu. 

60 

-0.50.00.51.01.52.0DEEU-27GDP perhead clusterChange 2018-2022Average 2018-2022 
 
   
 
 
 
systemic deficiencies have been reported. 

rate  continues  to  be  very  high  (114%  in  2022). 
The  quality  of  the  justice  system  is  good  overall. 
The  level  of  digitalisation  in  the  justice  system  is 
advanced.  However,  there  are  still  some  human 
resource  challenges,  particularly  the 
level  of 
judges’  salaries.  On  judicial  independence,  no 

Table A13.1:Public administration indicators 

(1) High values denote a good performance, except for indicator # 6. (2) 2023 value. If unavailable, the latest value available is 
shown. (3) Measures the user centricity (including for cross-border services) and transparency of digital public services as well as 
the existence of key enablers for the provision of those services. (4) Defined as the absolute value of the difference between the 
percentage of men and women in senior civil service positions. 
Flags: (b) break in time series; (d) definition differs; (u) low reliability. 
Source: E-government activities of individuals via websites, Eurostat (# 1); E-government benchmark report (# 2); Open data 
maturity report (# 3); Labour Force Survey, Eurostat (# 4, 5, 7); European Institute for Gender Equality (# 6); Fiscal Governance 
Database (# 8, 9); OECD Indicators of Regulatory Policy and Governance (# 10). 

Graph A13.2: a) Use of public authorities’ websites or apps (left side); b) e-government maturity (centre); 
c) share of individuals with basic or above basic overall digital skills (right side) 

(1) 2023 data. Indicators a and c: % of people who used the internet in the last year. 
Source: Eurostat and e-government benchmark report 

61 

20%40%60%80%100%Interacting withauthoritiesDownloading  /printing officialformsMaking anappointmentReceive officialcommunications / documentsSubmit onlinetax declarationRequestdocuments,benefitsa) E-government usersDEEU-2748%50%52%54%56%58%60%62%DEEU-27c) Digital skills202320210102030405060708090100DEEU-27b) E-government benchmark scoreUser centricityTransparencyKey enablersCross-border services2022DE20192020202120222023EU-27(2)1n/an/an/a55.162.275.02n/a62.163.265.165.775.830.70.90.90.80.90.8441.942.7 (b)44.2 (b)45.145.752.959.38.0 (b)8.2 (b)9.59.317.9636.639.039.638.223.09.271.21.3 (b)1.4 (b)1.31.31.580.60.60.70.7n/a0.791.41.41.41.4n/a1.410n/an/a2.27n/an/a1.7Medium-term budgetary framework indexIndicator (1)E-government and open government dataShare of internet users within the last year that used a public authority website or appE-government benchmark overall score (3) Open data and portal maturity indexEducational attainment level, adult learning, gender parity and ageingShare of public administration employees with higher education (levels 5-8, %)Participation rate of public administration employees in adult learning (%)Gender parity in senior civil service positions (4)Ratio of 25-49 to 50-64 year olds in NACE sector OPublic financial management Strength of fiscal rules indexEvidence-based policy makingRegulatory governance 
 
 
     
 
      
 
FAIRNESS 
ANNEX 14: EMPLOYMENT, SKILLS AND SOCIAL POLICY CHALLENGES IN LIGHT OF 
THE EUROPEAN PILLAR OF SOCIAL RIGHTS 

The  European  Pillar  of  Social  Rights  is  the 
compass  for  upward  convergence  towards 
better  working  and  living  conditions  in  the 
EU. This Annex provides an overview of Germany’s 
progress in implementing the Pillar’s 20 principles 
and the EU headline and national targets for 2030 
on employment, skills and poverty reduction. 

Table A14.1:Social Scoreboard for Germany 

Update of 25 April 2024. Members States are categorised 
based on the Social Scoreboard according to a methodology 
agreed with the EMCO and SPC Committees. Please consult 
the Annex of the Joint Employment Report 2024 for details on 
the methodology. 
Source: Eurostat 

in  2023,  the 

While  the  German  economy  endured  a  slight 
contraction 
labour  market 
remained  robust.  Even  though  the  economy 
contracted  by  0.3% 
in  2023,  employment 
increased  by  0.7%  and  unemployment  remained 
at  3.0%.  The  share  of  young  people  not  in 
employment, education or training (NEETs) was at 
8.8%  in  2023,  below  the  EU  average  of  11.2%, 
while  youth  unemployment  was  at  5.8%,  well 
below the EU average of 14.5%. There is, however, 
potential  to further increase the employment rate 
of  the  low  qualified  (66.1%  in  2023  vs  65.3%  in 
2022%) and of people born outside the EU (67.1% 
in 2023 vs 67.3% in 2022). There is also scope to 
reduce the gap in the employment rate of persons 
with disabilities (24.2 pps in 2022) and to increase 

the total number of hours worked to alleviate the 
current labour shortages.  

the 

long  term (147).  There 

Shortages of skilled labour pose obstacles to 
economic  growth,  competitiveness  and  the 
rapidly  ageing 
twin  transition.  While 
population  limits  the  availability  of  labour,  in  the 
fourth  quarter  of  2023  there  were  around 
1 711 000 job vacancies compared to only 1 362 
000  unemployed  people  immediately  available 
(ILO  definition).  Labour  shortages  create  major 
obstacles  to  business  activity,  resulting  in  a  loss 
estimated  at  2%  of  GDP,  with  half  of  companies 
reporting  that  vacancies  cannot  be  filled  even  in 
the 
is  a  shortage  of 
applicants  for  jobs  in  the  public  administration, 
technology  and  IT,  where  gaps  are  expected  to 
persist.  To  improve  the  conditions  for  labour 
migration,  the  German  Parliament  updated  the 
Skilled  Immigration  Act  in  2023.  Germany  also 
introduced  an  Education  and  Training  Guarantee 
for young people. In contrast to the rest of the EU, 
Germany’s  rate  of  early  school  leavers  was  at 
12.2%  in  2022,  substantially  above  the  EU-level 
target of below 9% (148). By contrast, the country is 
one of the top performers in the EU in vocational 
education  and  training.  Adult  participation 
in 
learning in the previous 12 months was also above 
the EU average in 2022, at 53.7% vs 39.5% in the 
EU (149), but still far from Germany’s national skills 
target  of  65%  by  2030.  With  52.2%  in  2023, 
Germany  is  below  the  EU  average  of  55.6%  of 
adults  with  at  least  basic  digital  skills.  It  is 
especially  young  people  who  are  lagging  behind 
the EU average (55.7% vs 70.0 at EU level for 16-
24  years  old)  (see  Annex  10).  The  Recovery  and 
(RRF),  the  ESF+  and  Just 
Resilience  Facility 
Transition  Fund  finance  skills  development  for 
groups that are difficult to reach, and help them to 
adjust to the green and digital transitions.  

Despite  the  increased  labour  demand,  tax 
second  earners  and 
disincentives 

for 

(147) Deutsche Industrie- und Handelskammer, 2023, Fachkräfte-

Report 2023/2024, dihk.de. 

(148) European Commission, 2023, Education and Training Monitor 

2023, ec.europa.eu. 

(149) Adult Education Survey, adults in learning in the past 12 

months, excluding guided-on-the-job-training, ec.europa.eu. 

62 

53.712.852.28.87.74.481.13.11113.621.124.442.1924.211.924.60.3Dynamic labour markets and fair working conditionsEmployment rate(% of the population aged 20-64, 2023)Unemployment rate(% of the active population aged 15-74, 2023)Long term unemployment(% of the active population aged 15-74, 2023)Gross disposable household income (GDHI) per capita growth(index, 2008=100, 2022)Social protection and inclusionAt risk of poverty or social exclusion (AROPE) rate (% of the total population, 2022)At risk of poverty or social exclusion (AROPE) rate for children(% of the population aged 0-17, 2022)Impact of social transfers (other than pensions) on poverty reduction(% reduction of AROP, 2022)Disability employment gap (percentage points, population aged 20-64, 2022)Housing cost overburden (% of the total population, 2022)Children aged less than 3 years in formal childcare (% of the under 3-years-old population, 2022)Self-reported unmet need for medical care (% of the population aged 16+, 2022)Policy areaHeadline indicatorEqual opportunities and access to the labour marketAdult participation in learning (during the last 12 months, excl. guided on the job training, % of the population aged 25-64, 2022)Early leavers from education and training(% of  the population aged 18-24, 2023)Share of individuals who have basic or above basic overall digital skills(% of the population aged 16-74, 2023)Young people not in employment, education or training(% of the population aged 15-29, 2023)Gender employment gap(percentage points, population aged 20-64, 2023)Income quintile ratio (S80/S20, 2022) 
 
 
 
  
 
 
 
insufficient  childcare  provision  negatively 
affect  women’s  working  hours.  Germany  has 
one  of  the  highest  female  employment  rates  in 
the  EU  (77.2%  in  2023)  but  also  some  of  the 
highest  gender  gaps  in  part-time  employment 
(36.9 pps in 2023 vs EU 20.2 pps), in  pay (17.7% 
vs  EU  12.7%  in  2022)  and in  pensions (27.6% vs 
EU  26%  in  2022).  The  interplay  of  the  tax  and 
benefit  system  creates  disincentives  for  second 
and low-wage earners – a considerable number of 
whom  are  women  -  to  work  more  hours (150)  (see 
Annex  19).  Although  the  absolute  number  of 
children under  3  in  formal  childcare increased,  its 
share  remained  stable  over  the  last  7  years  (at 
around 30%) (151). Socio-economic background has 
a  strong  impact  on  education  outcomes,  and  the 
significant  share  of  children  with  a  migrant 
background (39% of children under 5 years old in 
2022),  underlines  the  importance  of  providing 
quality  childcare  and  all-day  schools,  and  of 
ensuring  an  inclusive  and  supportive  education 
system  (see  Annex  15).  The  RRF  complements 
national  investments  in  creating  90 000  childcare 
places. 

Germany  has  a  strong  social  protection 
system  but  poverty  risks,  especially  for 
children,  remain  high,  while  there  are 
significant  wealth  inequalities.  Almost  one  in 
four  children  was  at  risk  of  poverty  or  social 
exclusion  in  2023  (23.6%),  while  the  share  of 
children  affected  by  severe  material  and  social 
deprivation  rose  from  5.5%  in  2021  to  8.9%  in 
2023.  With  an  increase  of  more  than  1  million 
people  living  in  households  with  very  low  work 
intensity  from  2020  to  2023,  Germany  is  still  far 
from achieving its target of reducing this group by 
1.2  million,  including  300 000  children,  by  2030 
(see Table A14.2). Implementation of the European 
Child  Guarantee  is  ongoing,  even  though  most  of 
the  planned  measures  lack  target  values.  The 
introduction  of  the  Citizen’s  Benefit  and  the 
currently  discussed  Act  for  the  Guaranteed  Child 
Allowance  aim  to  address  poverty  risks,  while 
maintaining incentives for parents to participate in 

the  labour  market.  Minimum  wage  updates  also 
helped protect the purchasing power of low-wage 
earners.  Low  effective  tax  rates  on  inheritances 
and gifts maintain the high wealth inequality: 10% 
of  the  richest  households  owned  55.5%  of  net 
wealth  in  2021,  one  of  the  highest  rates  in  the 
EU (152). Recent research suggests that real estate 
in  Germany  is  taxed  at  comparatively  low  rates, 
benefiting  primarily  affluent  people (153) 
(see 
Annex 19).  

Housing  supply  remains  constrained  in  the 
face  of  an  increasing  need  for  affordable 
housing.  According  to  a  recent  study (154)  the 
estimated housing shortage in Germany increased 
to  800  000  dwellings  at  the  end  of  2023  (see 
in 
Annex  12).  The  share  of  people 
households with housing costs above 40% of their 
total  income  increased  to  13.6%  in  2023,  above 
the EU average of 8.7% in 2022. In January 2024, 
the  new  Building  Energy  Act  entered  into  force, 
prescribing 
residential 
environment-friendlier 
heating.  

living 

Table A14.2:Situation of Germany on 2030 
employment, skills and poverty reduction targets 

(1) Adult Education Survey, special extraction: adults in 
learning in the past 12 months, special extraction excluding 
guided on-the-job training. (2) The EU headline target set in 
terms of number of persons at risk of poverty or social 
exclusion (AROPE), reference year 2019. (3) Germany 
expresses its national target as a reduction in the number of 
persons living in households with very low work intensity 
(VLWI), reference year 2020. Break in series in 2020 for 
AROPE and VLWI. 
Source: Eurostat, DG EMPL 

(150) Due to its deficiencies, the Federal Audit Office 

recommended abolishing entirely the factor method 
(Faktorverfarhen) aiming at countering those effects 
(Bundesrechnungshof, 2021, Bemerkungen 2020 
Ergänzungsband, Nr. 31, bundesrechnungshof.de. 

(151) A sudden drop to 24.6% in 2022 might be a statistical 
outlier as data from the national register show a 
participation rate of 35.5% in 2022 (BMFSFJ, 2023, 
Kindertagesbetreuung Kompakt, bmfsfj.de. 

(152) See ECB, 2023, Household Finance and Consumption Survey, 
Table J4: Net wealth inequality indicators, ecb.europa.eu. 

(153) Bach and Eichfelder, 2021, Reform der 

Immobilienbesteuerung: Bodenwerte belasten und Privilegien 
streichen, DIW Wochenbericht 27/2021, diw.de; OECD, 2023, 
Economic Survey of Germany, oecd.org. 

(154) Eduard Pestel Institut, 2024, Bauen und Wohnen 2024 in 

Deutschland, mieterbund.de. 

63 

IndicatorsLatest dataTrend            (2016-2023)2030 targetEU target 81.1(2023)53.7(2022)1 066(2023)Poverty reduction2,3 (thousands)-1 200-15 000Employment (%)8378Adult learning1 (%)6560 
 
 
  
 
 
ANNEX 15: EDUCATION AND TRAINING 

This  Annex  outlines  the  main  challenges  of 
Germany’s  education  and  training  system 
based on the 2023 Education and Training Monitor 
and  the  2022  OECD  Programme  for  International 
Student Assessment (PISA) results.  

An  increasing  share  of  15-years-old  lack 
sufficient 
levels  of  basic  skills  with  a 
negative impact on competitiveness. According 
to PISA 2022 the decline in mathematics, reading 
and  science  skills  between  2018  and  2022,  as 
measured  in  PISA  2022,  continued  a  longer-term 
trend. The underachievement rate in mathematics 
(29.5%)  in  2022  is  around  the  EU  average, 
whereas  the  share  of  underachievers  is  slightly 
below  the  EU  average  in  science  and  reading. 
in 
the 
While 
mathematics 
strongly 
between 2018 and 2022 (+8.4 pps vs EU 6.6 pps), 
underachievement 
reading 
increased  at  a  higher  rate  between  2012  and 
2018. The significant decline in learning outcomes 
of 15-year-old students in all three fields tested in 
Germany  and  at  EU  level  may  further  worsen 
existing labour and skills shortages.  

number 
increased  particularly 

of  underachievers 

science  and 

in 

Graph A15.1: Underachievement rates by field, 
PISA 2012, 2018 and 2022 

Source: OECD (2023). 

on 

educational 

The influence of socio-economic and migrant 
background 
outcomes 
increased  even  further.  The  underachievement 
rate  of  students  from  the  lowest  socio-economic 
quartile  increased  between  2018  and  2022  by 
nearly one third (+11 pps) reaching 46.6%, slightly 
below  the  EU  average  (48%).  The  rate,  however, 
remained  stable  for  students  from  the  highest 
quartile.  Foreign-born  students  underperform  in 
mathematics  three  times  more  than  native-born 
(64.0%  vs  21.9%).  The  large  gap  (at  42.1 pps) 
shrinks  to  one  third  (12.6 pps)  for  native-born 
students whose parents were born abroad. 

students 

The share of top-performing students in PISA 
remains  above  the  EU  average  but  declined 
strongly  in  mathematics.  The  share  of  top-
performing 
has 
decreased  by  8.9 pps  since  2012,  effectively 
halving  from  17.5%  in  2012  to  8.6%  in  2022.  In 
reading,  it  dropped  by  3.1 pps  between  2018  and 
2022  and  now  stands  at  8.2%;  while  there  was 
practically no change in science (- 0.3 p.p.) at 9.7% 
in 2022.   

in  mathematics 

investments 

Targeted 
in  education  are 
needed.  A  new  10-year  federal  programme 
‘Startchancen’,  implemented  at  the  level  of  the 
federal  states,  targets  mainly  disadvantaged 
students.  With  an  annual  federal  contribution  of 
EUR 1  billion,  it  is  expected  to  start  in  the  school 
year 2024-2025, but has a limited scope. Federal 
states  are  expected  to  match  federal  funds, 
helping to target up to 4 000 schools (about 10% 
of all German schools) (155). 

Germany  faces  serious  teacher  shortages, 
especially in science, technology, engineering 
and mathematics (STEM) subjects. Estimations 
indicate  a  9.2%  increase  in  student  numbers (156) 
while a quarter of all schoolteachers are currently 
above  55  years  of  age (157)  and  will  need  to  be 
replaced  during  the  next 10 years.  Although  there 
is  no  comprehensive  statistical  data  on  teacher 
shortages,  stakeholders  agree  that  serious  staff 
shortages exist (158), especially in STEM disciplines. 
The  number  of  active  teachers,  including  STEM 
teachers,  is  expected  to  fall  by  one  third  by 
2030 (159). 

The  teaching  profession  in  Germany  lacks 
appeal,  despite  good  wages.  Expressed 
in 
purchasing  power  parity,  initial  statuary  salaries 
for  permanently  employed  teachers  in  Germany 
are  the  second  highest  in  the  EU (160).  Salary 
progression,  however,  remains  low in  comparison 

(155) BMBF, 2024, Startchancenprogramm, bmbf.de.     

(156) KMK, 2023, Einstellung von Lehrkräften, kmk.org. 

(157) Eurostat, 2024, educ_uoe_perp01, ec.europa.eu.  

(158) Klemm, K.,2022, Entwicklung von Lehrkräftebedarf und -

angebot in Deutschland bis 2035, estimates a gap of up to 
150 000 teachers until 2035, vbe.de.  

(159) ibidem FN 148  

(160) European Commission, 2021, Teachers in Europe: Careers, 

Development and Well-being (2021), ec.europa.eu. 

64 

0.05.010.015.020.025.030.035.0DEEUDEEUDEEUMathematicsReadingScience%2012201820222030 EU target 
 
  
 
 
 
Table A15.1:EU-level targets and other contextual indicators under the European Education Area 
strategic framework 

Notes: b = break in time series; d = definition differs; e = estimated; p = provisional; u = low reliability; : = data not available. 
Source: 1,3,4,5,7,8,9,10,12=Eurostat; 11= Eurostat, Adult Education Survey; 2,6=OECD, PISA. 

with the EU (161). While teachers generally like their 
work,  nearly  a  third  of  teachers  would  not  advise 
young  people  to  enter  the  profession (162).  A  14% 
drop in teacher education graduates over 10 years 
reflects 
the 
profession (163). 

in  attractiveness  of 

fall 

the 

faces  significant  unmet 
Germany  still 
demand  for  early  childhood  education  and 
care (ECEC). In 2021, 93.1% of children between 
3  and  school  age  attended  ECEC,  below  the  EU-
level  target  of  96%.  In  2021,  despite  expanding 
capacity,  13%  of  demand  for  under-3-year-olds 
could  not  be  satisfied  in  the  west  of  the  country, 
and 8% in the east. Municipalities may fulfil their 
legal obligation to provide an ECEC place for each 
child  older  than  1 year  only  by  2025  in  the  east 

requirements 

and  by  2028  in  the  west (164)  with  a  12–15-year 
delay.  An  acute  shortage  of  staff  triggered  the 
lowering  of 
to  enter  ECEC 
professions while a lack of qualified staff hampers 
improving  the  quality  of  services.  The  2022  ECEC 
quality  law  (‘KiTa-Qualitätsgesetz’)  provides (165) 
federal  funding  of  EUR 4  billion  for  quality  and 
participation improvement. 

Germany  has  the  potential  to 
increase 
tertiary  education  attainment.  From  2012  to 
2023,  Germany  increased  its  tertiary  education 
attainment  by  9.5 pps.  However,  at  38.4%, 
Germany  is  still  4.7 pps  behind  the  EU  average 
(43.1%)  and significantly below the 45% EU-level 
target for 2030. The relatively low attainment rate 
can partly be linked to the effective and important 
dual vocational education and training system (see 
Annex 14). 

(161) European Commission, Teachers' and School Heads' Salaries 

and Allowances in Europe 2020-2021, ec.europa.eu.  

(162) Autor:innnengruppe Bildungsberichterstattung, 2022, Bildung 

in Deutschland 2022, https://bildungsbericht.de. 

(164) See footnote 152. 

(163)European Commission, 2023, Education and Training Monitor 

(165) Following EUR 5.5 billion funding by the 2019 KiTa-

Germany, ec.europa.eu. 

Qualitätsgesetz (Good ECEC law). 

65 

96%95.8%201391.8%201394.2%92.2%93.1%202192.5%2021,dReading< 15%14.5% 18.0%20.7% 22.5%25.5%202226.2%2022Mathematics< 15%17.7% 22.1%21.1%22.9%29.5%202229.5%2022Science< 15%12.2% 16.8%19.6%22.3%22.9%202224.2%2022< 9 %10.5%12.6%10.3%10.5%12.8%9.5%Men11.1%14.5%11.5%12.1%15.2%11.3%Women9.9%10.6%9.1%8.7%10.4%7.7%Cities11.3%b11.2%10.5%9.4%12.4%8.6%Rural areas8.0%b14.0%8.3%11.0%10.5%9.9%5By country of birthNative9.3%11.3%8.1%9.2%9.7%8.2%EU-born:26.2%26.0%22.4%33.5%21.0%Non EU-born:30.1%23.2%23.0%27.8%21.6%6Socio-economic gap (percentage points)27.9:29.329.538.2202237.220227Exposure of VET graduates to work-based learning≥ 60% (2025) ::: :94.1% 64.5%45%28.9%34.1%32.3%38.7%38.4%43.1%Men26.8%29.1%31.1%33.3%36.1%37.6%Women31.0%39.2%33.6%44.2%41.0%48.8%Cities35.8%b43.5%41.3%49.0%45.6%53.3%Rural areas21.9%b24.8%23.4%27.7%30.2%31.7%Native29.8%35.4%32.4%39.7%39.3%44.2%EU-born:29.3%33.8%36.7%33.1%40.2%Non EU-born:24.2%31.2%31.0%36.9%37.1%11Participation in adult learning (age 25-64)≥ 47% (2025) ::46.4%201637.4%201653.7%202239.5%202233.7%201322.7%201328.4%23.8%25.0%202124.5%2021Tertiary educational attainment (age 25-34)8Total8By gender9By degree of urbanisation10By country of birth12Share of school teachers (ISCED 1-3) who are 55 years or over1Participation in early childhood education (age 3+)2Low-achieving 15-year-olds in:Early leavers from education and training(age 18-24)3Total3By gender4By degree of urbanisation201220182023IndicatorTargetGermanyEU-27GermanyEU-27GermanyEU-27 
 
 
 
  
 
ANNEX 16: HEALTH AND HEALTH SYSTEMS 

A  healthy  population  and  an  effective, 
accessible  and  resilient  health  system  are 
prerequisites  for  a sustainable  economy and 
society.  This  Annex  provides  a  snapshot  of 
in 
population  health  and  the  health  system 
Germany. 

Life  expectancy  in  Germany  is  marginally 
higher than in the EU overall, and fell in the 
3 years  following  the  start  of  the  COVID-19 
pandemic.  The  initial  fall  in  life  expectancy  in 
2020  was  small  in  Germany  compared  to  the  EU 
as  a  whole.  This  gap  closed  as  life  expectancy  in 
the  rest  of  the  EU  rebounded  in  2022.  Germany 
fares  comparatively  well  in  avoiding  deaths  from 
treatable  causes.  The  main  mortality  causes  are 
cardiovascular diseases and cancer. 

Graph A16.1: Life expectancy at birth, years 

2021, among the highest rates in the EU. The high 
number  of  hospital  beds  poses  questions  about 
efficiency and overcapacity. To reduce the number 
of inpatient cases and encourage more outpatient 
services,  as  well  as  guaranteeing  quality,  a  new 
government  commission  has  proposed  changing 
the financing system for hospitals and developing 
a  new  instrument  for  hospital  planning  based  on 
quality  criteria.  Based  on  the  age  profile  of  the 
insured  by  social  health 
German  population 
insurance,  public  expenditure  on  health 
is 
projected  to  increase  by  0.5  percentage  points 
(pps) of GDP by 2070, compared to 0.6 pps for the 
EU overall (see Graph A16.2 and Annex 21). 

Graph A16.2: Projected increase in public 
expenditure on healthcare over 2024-2070 

Baseline scenario 
Source: European Commission / EPC 

reaching  6.5%  of 

Spending on prevention has doubled over the 
total 
last  decade 
healthcare  spending  in  2021,  slightly  above 
the  EU  average  6.0%.  The  increase  relative  to 
the 2019 level (3.4% of total healthcare spending) 
is  pronounced,  with  spending  increases  driven  by 
programmes 
and 
for 
immunisation, linked to COVID-19. 

detection 

disease 

Numbers  of  doctors  and  nurses  per  capita 
are  well  above  the  EU  average.  Though  the 
number of doctors in hospitals has been increasing 
since  the  introduction  of  the  diagnosis-related 
group-based payment system in 2004, the number 
of nurses working in hospitals is not sufficient. To 
boost numbers, hospital payment rules have been 
changed, so that the costs of nursing staff are no 
longer 
the  case-based  payment 
system.  Moreover,  in  addition  to  increasing  the 
number of nursing graduates, the ‘Nursing Training 
Initiative’  contains  several  measures  aimed  at 
attracting more people into the profession. 

included 

in 

Source: Eurostat 

Germany  has  the  highest  spending  on 
healthcare  in relation  to  GDP  (12.9%) in  the 
EU.  Spending  on  healthcare  increased  from  2020 
to  2021  (in  relative  and  in  absolute  terms). 
Provisional  data  for  2022  indicate  that  spending 
on healthcare will fall back to 12.6% of GDP. Most 
health  spending  is  publicly  funded;  out-of-pocket 
payments  are  comparatively  low  (12.0%  of  total 
health expenditure, compared to an EU average of 
14.5%  in  2021).  Alongside  the  statutory  health 
insurance system, there is a parallel private health 
insurance  scheme  for  some  population  groups, 
such  as  civil  servants,  the  self-employed  and 
people  with  earnings  above  a  certain  threshold; 
they can opt out  of the solidarity-based statutory 
health  insurance  scheme.  Spending  per  capita  is 
above the EU average on inpatient care, outpatient 
care, 
long-term  care,  disease  prevention  and 
pharmaceuticals and medical devices. Spending on 
long-term care has grown more strongly compared 
to  other  expenditure  categories  in  recent  years. 
Germany has a very large hospital inpatient sector, 
with  7.8  hospital  beds  per  1 000  population  in 

66 

81.181.081.381.180.880.780.981.081.380.480.180.6201720182019202020212022GermanyEU6.67.70.60.502468EUGermany% of GDP20242070increase 
 
   
 
   
 
 
Table A16.1:Key health indicators 

Note: The EU average is weighted for all indicators except for doctors and nurses per 1 000 population, for which the EU simple 
average is used. Doctors’ density data refer to practising doctors in all countries except Greece, Portugal (licensed to practise) and 
Slovakia (professionally active). Nurses’ density data refer to practising nurses in all countries except Ireland, France, Portugal, 
Slovakia (professionally active) and Greece (hospital only). 
Source: Eurostat Database; except: * OECD, ** Joint Questionnaire on non-monetary healthcare statistics, *** ECDC, **** Council 
Recommendation on stepping up EU actions to combat antimicrobial resistance in a One Health approach. 

Through  its  recovery  and  resilience  plan, 
invest  EUR 4.3 billion 
Germany  plans  to 
(15.26%  of  the  plan’s  total  value) 
in 
healthcare.  Investments  mainly  focus  on  the 
digital  transition  of  the  healthcare  system  (IT-
related  investment  in  hospitals  and  public  health 
services,  including  the  related  construction  and 
the 
refurbishment  of  buildings).  Most  of 
milestones  and  targets  have  not  been  completed 
yet.  In  addition,  complementary  investments  are 
planned  under  the  cohesion  policy  funds  from 
2021  to  2027.  Germany  intends  to  invest  around 
EUR 89 million  mainly  in  e-health  services  and 
applications,  further  digitalisation  of  healthcare 
and various measures to improve the accessibility, 
effectiveness  and  resilience  of  the  healthcare 
system (166).  The  digital  transition  in  healthcare  is 
an  ongoing  challenge 
is 
confirmed  by  recent  indicators  underscoring  the 
low  number  of  individuals  accessing  personal 
health  records  online 
in  Germany.  Moreover, 
EUROSTAT  data  for  2022  indicate  a  drop  in 
Germany  in  the  uptake  of  telemedicine  since 
2020,  a  pattern  going  contrary  to  the  continued 
increase  in  telemedicine  uptake  seen  in  the  EU 
overall. In order to drive forward the digitalisation 
of  the  health  system,  Germany  has  passed  the 
‘Digital Act’, which came into force in March 2024. 

in  Germany.  This 

(166) The EU cohesion policy data reflect the status as of 13 May 

2024. 

67 

20182019202020212022EU average (latest year) Treatable mortality per 100 000 population (mortality avoidable through optimal quality healthcare)85,481,880,881,3NA93.3 (2021)Cancer mortality per 100 000 population246,0243,8240,3235,7NA235.4 (2021)Current expenditure on health, % GDP 11,511,712,712,912,610.9 (2021)Public share of health expenditure, % of current health expenditure84,184,085,185,5NA81.1 (2021)Spending on prevention, % of current health expenditure 3,33,43,36,5NA6.0 (2021)Available hospital beds per 100 000 population798791782776NA525 (2021)Doctors per 1 000 population4,34,44,54,5NA4.1 (2021)*Nurses per 1 000 population11,511,812,012,0NA7.9 (2021)Total consumption of antibacterials for systemic use, daily defined dose per       1 000 inhabitants per day ***NA12.6****NANANA19.4 (2022) 
 
 
 
 
  
 
ANNEX 17: ECONOMIC AND SOCIAL PERFORMANCE AT REGIONAL LEVEL 

Annex 17 showcases the economic and social 
regional  dynamics  in  Germany.  It  provides  an 
analysis  of  economic,  social,  and 
territorial 
cohesion in the German regions compared with the 
rest of the EU and assesses emerging investment 
and  subnational  reform  needs  to  foster  economic 
growth, social development and competitiveness in 
the country. 

Overview 
of 
performance at regional level 

economic 

and 

social 

Brandenburg, 

Five  of  these  regions  are  in  the  East  of  Germany 
(Thüringen,  Sachsen-Anhalt,  Chemnitz  (a  part  of 
Sachsen), 
Mecklenburg-
Vorpommern) and two are in the West of Germany 
(Lüneburg  and  Trier).  Furthermore,  a  gap  in  GDP 
per  capita  between  urban  and  non-urban  areas 
also  remains.  In  2022,  the  GDP  per  capita  in 
predominantly  urban  areas  stood  at  EUR  54  400 
(current  prices  in  2022)  while  in  predominantly 
non-urban  areas  it  stood  at  EUR  38  610  (current 
prices in 2022). 

Map A17.1:  Germany, NUTS2: GDP per capita 
growth 2013-2022 

Economic  convergence  between  2013  and 
2022  was  relatively  modest.  A  sluggish 
national  average  GDP  per  capita  growth  of  0.8% 
(below the EU average of 1.4%) was accompanied 
regions. 
by  diverse  growth  patterns  across 
(Figures 1 and 2). 

Graph A17.1: Germany, NUTS2: GDP per capita 
(2011) and GDP growth (2013-2022) 

Source: Eurostat 

Regional  disparities  in  GDP  per  capita  in 
Germany have been gradually declining since 
2011 but remain significant between regions. 
In 2022, the Hamburg region's GDP per capita (in 
PPS)  stood  at  195%  of  the  EU  average  while  for 
regions  of  Oberbayern,  Stuttgart,  and 
the 
Darmstadt 
it  stood  at  between  169  and 
145% (167).  Other  regions  lagged  further  behind, 
with  the  lowest  GDP  per  capita  standing  at 
between  88  and  83%  of  the  EU  average  in  the 
seven  least  developed (168)  regions  in  the  country. 

(167) Statistics in Annex 17 are presented at NUTS1 and NUTS2 

level and based on Eurostat and ARDECO datasets. 

(168) For Annex 17, ‘less/least developed regions’ are defined as 
having a GDP per capita (PPS) in 2021 lower than the EU 
average (100); ‘developed regions’: 101 to 125; ‘more/most 
developed’ regions; 126 or higher. These terms should not be 
confused with the classification used for EU cohesion policy. 

Source: DG REGIO calculations based on JRC (ARDECO) and 
Eurostat data 

in 

Disparities  in  GDP  per  capita  mainly  arise 
from  differences 
labour  productivity 
between  more  and  less  developed  regions  in 
Germany. In 2022, labour productivity, measured 
as  gross  value  added  (GVA)  per  worker,  stood  at 
103% of the EU average in PPS (purchasing power 
standards)  terms.  It  reached  between  118  and 
134% 
regions  of 
the  more  developed 
Darmstadt, Stuttgart, Braunschweig, Hamburg and 
Oberbayern while varying between 80 and 84% in 
the  less  developed  Eastern  regions  of  Chemnitz, 
Thüringen and Mecklenburg-Vorpommern. 

in 

Productivity  convergence  has  been  gradual 
and in line with the convergence in economic 
output.  In  2013-2022,  annual  real  productivity 
growth  was  highest  in  Thüringen  (1.1%)  and 

68 

 
 
 
 
 
 
 
 
 
Table A17.1:Selected indicators at regional level - Germany 

Source: Eurostat, EDGAR database 

Rheinhessen-Pfalz  (1%)  followed  by  various  less 
developed  regions.  Growth  ranged  from  1.1%  in 
Thüringen  to  a  moderate  0.5% 
in  Freiburg, 
Mittelfranken  and  Braunschweig  and  overall 
ranged  above  the  EU  average  (0.7%).  Some 
Western  regions  experienced  a  decline  in  real 
productivity, notably in Saarland (-0.2%).  

regions 

In  2023, 

There  is  a  marked  difference  in  regional 
innovation  performance (169). 
the 
‘Innovation Leaders’, comprising some of the most 
(e.g.  Hamburg,  Karlsruhe, 
developed 
Oberbayern)  and  Berlin  showed  a 
regional 
innovation  performance  around  1.7  times  higher 
than  the  least  performing  regions  (Mecklenburg-
Vorpommern,  Sachsen-Anhalt,  Trier).  Most  less 
developed 
‘Moderate 
Innovators’, except for Dresden, Leipzig, Thüringen, 
and  Brandenburg,  which  were  classed  as  ‘Strong 
Innovators’. 

regions  were 

classed 

There  are  some  variations  in  terms  of 
competitiveness  across  regions.  All  German 
regions  ranked  above  the EU  average  in terms  of 
competitiveness in 2022 (170). However, there were 
sizeable  disparities  between 
regions,  with 
Oberbayern  and  Hamburg  leading  the  ranking 
amongst  German  regions  (130)  and  Sachsen-

(169) Based on the methodology of the 2023 European Innovation 
Scoreboard, which ranks countries’ and regions’ innovation 
performance by indicator groups: framework conditions, 
innovation activities, investments, and impacts. They classify 
‘Emerging Innovators‘, ‘Moderate Innovators‘, ‘Strong 
Innovators‘, and ‘Innovation Leaders‘. 

(170) 2022 Regional Competitiveness Index, EU-27 = 100. 

69 

Anhalt  and  Mecklenburg-Vorpommern 
featuring last in the ranking.  

(102) 

Expenditure  in  R&D  is  concentrated  in  the 
more developed Southern regions. It is highest 
in  Stuttgart  (6.8%  of  GDP  in  2021)  and  above 
3.4%  in  many  more  developed  regions  (except 
Hamburg), Rheinhessen-Pfalz, Berlin, and Dresden. 
R&D  investment  was  lowest  (less  than  1.0%  of 
GDP) in the Western regions of Trier, Koblenz and 
Lüneburg.  

There  are  significant  disparities  in  terms  of 
investment.  In  2020,  the  investment  rate  (gross 
fixed  capital  formation  as  a  share  of  GDP)  was 
lowest in Bremen and Düsseldorf (15%) as well as 
in  several  other  developed  and  more  developed 
regions.  However,  four  less  developed  regions 
(30%), 
ranked  very  high  –  Trier,  Lüneburg 
Mecklenburg-Vorpommern 
Brandenburg 
(25%),  exceeding  the  German  average  (22%) 
which stood around the EU average. 

and 

Labour  market  conditions  remained  among 
the  strongest  in  the  EU,  although  some 
disparities  persist.  All  German  regions  have  an 
unemployment rate below the EU average (6.1%). 
Unemployment  ranged  between  2.2%  and  5.2% 
across  the  German  regions.  The  decline  in  the 
unemployment  rate  over  the  past  decade  was 
strongest in the eastern regions, which had higher 
unemployment rates, and therefore more scope to 
reduce  it.  All  the  regions  recovered  from  the 
temporary  surge  in  unemployment  during  the 
COVID-19 pandemic. A high job vacancy rate (over 

Region nameGDP per head (purchasing power standard/PPS)GDP per head growthProductivity (GVA, PPS) per person employedReal productivity growthPopulation growthTotal population aged >65Unemployment rateR&D expenditureRegional competitivenessEU27 = 1002022Average % change on the preceding year 2013-2022EU27 = 1002022Average % change on the preceding year 2013-2022Average annual change per 1000 residents2013-2021% of total population2023% of labour force2023% of GDP2021EU27 = 1002022European Union (27 MS)1001.441000.71.921.36.12.3100Germany1170.79102.80.43.722.13.13.1117.3Baden-Württemberg1290.62108.60.45.720.92.75.6121Bayern1360.92111.40.55.720.92.23.4118.3Berlin1221.811030.79.518.95.23.4121.5Brandenburg881.0893.70.93.925.53.31.8121.5Bremen1440.41106.50.23.621.14.53.2109Hamburg1950.69133.80.47.417.942.2129.7Hessen1300.39110.80.1521.133.1120.9Mecklenburg-Vorpommern830.9584.10.60.726.44.31.8101.9Niedersachsen1060.5698.20.23.522.52.82.7108.2Nordrhein-Westfalen1120.5899.20.12.321.53.42.2122.7Rheinland-Pfalz1050.91101.20.73.222.632.8116.3Saarland99-0.1188.5-0.2-1.324.83.32107.5Sachsen911.2685.20.9-0.226.63.33.1111.2Sachsen-Anhalt871.1190.40.9-4.527.63.81.6101.8Schleswig-Holstein970.5493.50.14.523.53.11.7108Thüringen851.1883.41.1-3.227.132.8107.3 
 
 
   
 
 
in  Germany) 

4% (171) 
low 
unemployment  point  to  the  presence  of  labour 
shortages in many regions (Annex 14) (172). 

coupled  with 

is 

undergoing 

Germany 
substantial 
demographic  shifts,  which  create  regional 
variations linked to the level of development. 
Germany’s population has grown at an annual rate 
of  3.7 per 1  000  residents  between  2013  and 
2022, with the highest growth in Leipzig and Berlin 
at  8.6  and  9.5  per  1  000  per  year  respectively. 
However,  certain  regions,  particularly  the  less 
developed  regions  in  the  East,  like  Thüringen, 
Sachsen-Anhalt,  and  Chemnitz  have  witnessed 
significant decline in population (-3.2 to ‑4.5 per 1 
000 per year). This reflects broader trends in shifts 
between  non-urban  and  urban  areas  across 
Germany,  which 
in  growing  urban 
populations and expanding large cities.  

result 

Demographic evolution is putting pressure on 
the labour market and a strain on the service 
sector,  especially  in  some  (less  developed) 
regions  in  the  short  term.  In  the  medium  to 
long  term,  this  could  stifle  their  economic  growth 
and limit their capacity to deal with the challenges 
posed by an ageing population. 

Investment  and  subnational  reform  needs 
ahead 

Investment  priorities 
in  the  context  of 
cohesion  policy  are  mainly  focused  on 
supporting  the  country’s  green  and  digital 
transition.  The  priorities  set  out 
the 
programmes  adopted  in  2022  therefore  remain 
valid  under  the  current  economic  and  social 
circumstances.  

in 

and 

step-up 

development 

Germany  would  benefit  from  continuing  to 
use cohesion policy to increase investment in 
research, 
innovation 
(especially in SMEs and in eastern regions) as 
well  as  in  education  and  training  in  view  of 
the  green  and  digital  transition  challenges, 
and 
business 
investment 
development  and  support  for  enterprises. 
Further  areas  of  high  priority  include  promoting 
energy efficiency and renewable energies, tackling 
climate change adaptation as well as reducing the 
carbon  footprint,  including  through  facilitating 
technologies 
investments 
manufacturing.  For  regions  with  high-performing 
sectors 
it  would  be 
beneficial  to  continue  receiving  cohesion  policy 
funding to support the green and digital transition. 

locomotives), 

net-zero 

(growth 

in 

in 

In  order  to  maintain 
its  administrative 
capacity, it  would  be beneficial for  Germany 
to  address  staff  shortages,  particularly  in 
regions  lagging  behind  in  the  implementation  of 
cohesion  policy  programmes,  including  the  Just 
Transition Fund. 

Germany could also benefit from investment 
opportunities 
Strategic 
Technologies  for  Europe  Platform  (STEP) 
initiative 
in  critical 
technologies to support industry’s transition. 

investments 

to  boost 

under 

the 

Population  expansion  is  mainly  driven  by 
positive net migration (+5.8 per 1 000 residents 
per  year  between  2012  and  2021).  Increases  in 
net  migration  were  significant  in  most  southern 
regions but particularly strong in Brandenburg and 
Leipzig  (9.0  and  11.2  per  1  000  residents  per 
year). 

Population ageing poses a real challenge. The 
population  over  65  grew  by  10.5  per  1  000 
residents  per  year  between  2012  and  2021,  and 
their share increased to 22%, one of the highest in 
the  EU.  Five  less  developed  eastern  regions  fall 
into  a  talent  development  trap (173).  Chemnitz, 
Sachsen-Anhalt, 
Mecklenburg-
Vorpommern,  and  Dresden  are  experiencing 
depopulation (average annual change lower than -
7.5  per  1  000  residents)  in  the  working  age 
population and at the same time are below the EU 
average in terms of tertiary education attainment. 

Thüringen, 

(171) Job vacancy rate in selected NACE sectors, average in the 

first half of 2023: 6.6% in Construction (F); 4.6% in 
Transportation and storage (H); 5.8% in Accommodation and 
food service activities (I); 4.3% in Information and 
communication (J); 5.2% in Professional, scientific and 
technical activities (M); 8.2% in Administrative and support 
service activities (N); 4.5% in Human health and social work 
activities (Q). 

(172) The recent data of Eurofound show an increase in online jobs 
advertisements in nearly all regions between 2022Q2 and 
2023Q3, ranging from -1.2% in Luneburg to +75% in 
Munster. See also: cedefop.europa.eu.  

(173) European Commission, 2023, Communication from the 
Commission: Harnessing talent in Europe’s regions, 
COM(2023) 32 final, eur-lex.europa.eu.  

70 

 
 
MACROECONOMIC STABILITY 
ANNEX 18: KEY FINANCIAL SECTOR DEVELOPMENTS 

in 

sector 

Germany  hosts  the  EU’s  second-largest 
banking 
terms  of  assets, 
characterised  by  a  notable  abundance  of 
institutions.  At  the  end  of  2022,  there  were 
1 458  banks  in  Germany,  accounting  for  34%  of 
the  total  number  of  banks  in  the  euro  area.  Most 
of  these  banks  are  very  small  institutions:  only 
eight  Germany-headquartered  banks  are  deemed 
systemically  important  by  the  EBA.  There  have 
been mergers of small banks recently, in particular 
in  the  savings-bank  (Sparkassen)  sector  and 
cooperative-bank sector, leading to a 4.1% decline 
in  the  number  of  institutions  in  2023.  German 
banks  are  organised  into  three  main  ‘pillars’.  The 
first pillar is composed of 247 commercial banks, 
while  the  second  pillar  is  composed  of  public-
sector  banks,  including  362  saving  banks  and  6 
regional  banks  (Landesbanken).  The  third  pillar 
consists  of  736  cooperative  banks.  There  are  a 
further  107  banks  outside 
three-pillar 
category. 

the 

German banks are among the least profitable 
in  Europe,  given  their  high-cost  base, 
overcapacity  and intense  competition.  Due  to 
their  size,  many  small  banks  are  not  able  to 
achieve  economies  of  scale.  Profitability  was 
especially  weak  for  German  banks  during  the 
extended period of low interest rates. Starting with 
the  lift  off  in  rates  in  the  second  half  of  2022, 
their  profitability  improved.  Return  on  equity  rose 
from  4.3%  in  2022  to  7.2%  in  the  year  to  July 
2023,  but  it  was  still  the  lowest  in  the  EU.  This 
further 
subdued 
consolidation  among  credit  institutions  to  reduce 
costs.  However,  the  three-pillars  model,  with  its 
distinct 
limited 
geographic reach, poses challenges to the ongoing 
consolidation  of  banks  in  Germany.  Additionally, 
German banks maintain lower liquidity levels than 
their  EU  counterparts,  particularly  smaller  banks 
(so-called  less  significant  institutions),  with  a 
liquidity  coverage  ratio  of  146%,  contrasting  with 
the  EU  average  of  205%  as  of  Q3-2023.  All  the 
same,  these  levels  are  still  well  above  the  legal 
minimum levels. 

profitability 

ownership 

structures 

could 

drive 

and 

Asset  quality  remains  remarkably  high  and 
banks  have  strengthened  their  solvency. 
German  banks’  non-performing  loans  (NPLs)  ratio 
stood  at  1.2%  in  September  2023,  significantly 
lower  than  the  EU  average  of  1.8%.  However, 
weaker  economic  performance  and  high  interest 

71 

rates  combined  with  the  phase-out  of  pandemic 
rules led to a rise in business insolvencies in 2023, 
which  are  up  by  22.2%  compared  with  2022, 
albeit  still  4.9%  below  the  pre-pandemic  level  of 
2019.  This  increase  in  insolvencies  could  result in 
a significant deterioration in the risk profile of loan 
portfolios  in  2024.  Credit  risk  has  increased 
particularly  sharply  in  the  commercial  real-estate 
(CRE) sector. A pick-up in earnings has helped the 
banks  to  bolster  their  capital  cushions,  although 
their  capital  adequacy  ratio  (19.3%)  remains 
slightly below the EU average (19.6%).  In view of 
the  greater  systemic  risk,  Germany’s  Federal 
(BaFin)  has 
Financial  Supervisory  Authority 
capital  buffer 
countercyclical 
maintained  a 
requirement of 0.75% and a sectoral systemic risk 
buffer  of  2.0%  on  loans  secured  by  residential 
property since February 2023. 

Graph A18.1: Evolution of credit activity 

Source: ECB 

Household  and  business  lending  slowed  in 
2023,  but  both  sectors  remain  resilient. 
Households  expanded  their  borrowing  in  the  low-
interest-rate  environment  which  prevailed  until 
mid-2022  causing  aggregate  household  debt  to 
reach  100%  of  disposable  income.  Since  then, 
household  borrowing  has  declined  to  97%  of 
disposable income as credit creation slowed in the 
face  of  higher  interest  rates.  German  households 
are to some extent shielded from the interest rate 
rises thanks to the long fixed-interest-rate periods 
in  effect  for  most mortgage  loans,  which  account 
for  about  75%  of  household  debt.  The 
Bundesbank,  Germany’s  Central  Bank,  thinks  that 
only a very small  subset of households could see 
in  the 
their  debt-service  capacity  deteriorate 

-6-4-20246810121416200920102011201220132014201520162017201820192020202120222023Total privateNFCHH% 
 
 
  
 
Table A18.1:Financial Soundness Indicators 

(1) Last data: Q3 2023. 
(2) Data are annualised. 
(3) Data available for EA countries only, EU average refers to EA area.(1)  
Source: ECB, Eurostat 

future (174).  After  having  risen  for  more  than  a 
decade,  house  prices  started  to  decline  in  2022. 
This could pose a risk if collateral values were not 
sufficient  to  cover  for  losses  in  the  event  of 
default.  However,  the  scarcity  of  living  space  in 
major cities may prevent property valuations from 
falling too far. Businesses, on the other hand, have 
faced  much  steeper  increases  in  their  interest 
burden,  as  27%  of  outstanding  non-financial 
corporation loans have variable rates and are fixed 
for shorter periods. The sector is still considered in 
solid  shape  as  company  profitability  has  now 
recovered to pre-pandemic levels. 

in 

Loans  for  CRE  pose  a  significant  risk  for  a 
small  subset  of  German  banks.  The  CRE 
lending segment has come under pressure due to 
structural  factors  (such  as  changes  in  work  and 
trade patterns which have led to an oversupply of 
office space) and cyclical factors (in particular the 
rise 
interest  rates).  German  banks  have 
moderately  high  exposure  to  the  CRE  sector,  with 
loans  worth  EUR  285  billion  in  September  2023, 
corresponding to 116.7% of their aggregate Tier 1 
capital.  While  the  overall  loan  amount  for  CRE 
grew slightly over the past 10 years as real-estate 
valuations  increased,  the  share  of  CRE  in  NFC 
loans  has  remained,  with  small  fluctuations, 
largely  unchanged  at  around  32%  over  the  past 
10  years.  However,  the  aggregate  numbers  hide 
significant differences among banks. A handful of 

banks  that  specialise  in  real-estate  lending  have 
exposures  exceeding  many  multiples  of  their 
capital.  Notably,  these  banks  not  only  lend  in 
Germany,  but  have  a  large  part  of  their  exposure 
spread  across  Europe  and  the  United  States. 
Therefore,  their  solvency  hinges  not  only  on  the 
German  property  market,  but  property  markets 
across the world. BaFin highlighted the risks from 
CRE in its publication on major risks for 2024 (175), 
saying  that  it  expected  this  loan  segment  to 
reduce  banks’  asset  quality  and  possibly  lead  to 
some  defaults.  Indeed,  NPLs  in  the  CRE  segment 
have  already  risen.  For  the  group  of  significant 
institutions,  which 
includes  4  out  of  6 
Landesbanken, the CRE NPL ratio climbed to 3.4% 
in  September  2023,  up  from  2.0%  at  the 
beginning  of  the  year.  The  risks  are  mitigated  by 
conservative  underwriting  standards  and  solid 
loan-to-value buffers. 

Germany is the second-largest participant in 
the  EU  insurance  market,  with  insurance 
companies  holding  assets  of  EUR 2.1 trillion 
in  2023.  In  recent  years,  German  insurance 
companies  have  strengthened 
their  solvency 
profiles,  surpassing  the  EU  average  in  financial 
robustness.  A  notable  trend  in  recent  years  has 
been a shift in the exposure of German insurance 
companies 
categories. 
Traditionally,  German 
insurers  predominantly 
invested in fixed-income assets. However, German 
insurance  companies  have  significantly  increased 

different 

asset 

to 

(174) Deutsche Bundesbank, November 2023, Financial Stability 

Review, bundesbank.de.  

(175) BaFin, 2024, Risiken im Fokus der BaFin, BaFin.de. 

72 

2017201820192020202120222023EUMedianTotal assets of the banking sector (% of GDP)236.0231.1239.2262.8253.6271.3251.2257.0184.6Share (total assets) of the five largest banks (%)29.729.131.234.031.835.0--69.6Share (total assets) of domestic credit institutions (%)193.189.087.183.781.879.378.5-62.9NFC credit growth (year-on-year % change)4.26.55.84.26.110.31.4-2.4HH credit growth (year-on-year % change)3.23.94.44.85.14.30.6-1.4Financial soundness indicators:1        - non-performing loans (% of total loans)1.81.41.21.21.11.11.21.81.8- capital adequacy ratio (%)18.818.418.118.818.518.819.319.620.1- return on equity (%)22.92.42.12.24.04.37.29.913.2Cost-to-income ratio (%)174.076.875.570.768.869.957.752.844.9Loan-to-deposit ratio (%)189.490.287.780.881.083.985.693.380.2Central bank liquidity as % of liabilities1.61.41.24.75.53.11.0-0.7Private sector debt (% of GDP)106.6109.1112.2120.9120.4118.4-133.0118.4Long-term interest rate spread versus Bund (basis points)0.00.00.00.00.00.00.0107.7104.2Market funding ratio (%)54.153.652.050.751.049.9-50.839.8Green bonds outstanding to all bonds (%)3---2.43.04.35.24.02.71-34-1011-1718-2424-27Colours indicate performance ranking among 27 EU Member States. 
 
 
 
  
 
investments 

their 
in  recent  years. 
in  equity 
Currently, their 21% share in equity investments is 
considerably  larger  than  the  average  15%  seen 
among  EU  insurance  companies.  The  market  is 
also  characterised  by 
low  concentration  and 
intense competition, where the top three insurance 
companies  have  a  relatively  small  share  of 
premium  income.  Insurance  intermediaries  play  a 
notable role  in distributing life insurance products 
for 
they  are 
in  Germany,  as 
approximately 80% of the gross written premium. 

responsible 

is 

the 

The  Frankfurt  Stock  Exchange,  operated  by 
Deutsche  Börse, 
largest  stock 
exchange in Germany, and its performance in 
2023  has  been  in  line  with  global  stock 
markets, showing positive results. However, a 
persistent  concern  has  been  the  notable  absence 
of initial public offerings throughout the year. Even 
some large German companies chose to list on US 
in  Germany.  The 
stock  markets  rather  than 
financial  drought 
facing  German  start-ups, 
especially  for  scale-up  financing,  has  become 
more  pronounced  in  recent  years.  In  2023,  these 
in 
emerging  businesses  secured  EUR 6 billion 
venture  capital,  reflecting  a  significant  39% 
decrease compared with the previous year's figure 
of  EUR 9.9 billion.  The  recently  enacted  German 
Future  Financing  Act  aims  to  address  this  issue, 
with  one  of  its  main  goals  being  to  facilitate 
access to public equity for start-ups and small-to-
mid-sized  companies.  Additionally,  various  EU 
initiatives,  such  as  the  proposed  Listing  Act,  are 
anticipated  to  help  reverse  this  trend  in  2024. 
Finally,  investments  in  private  equity  in  Germany 
relative  to  nominal  GDP  lag  well  behind  the  EU 
average (EC DG FISMA Overview of CMU Indicators 
–  2023;  indicator  11).  Moreover,  private  equity 
investments have been on a downward trend since 
2021,  falling  below  2017  levels  by  the  end  of 
2023, albeit this was in line with global trends. 

73 

 
 
ANNEX 19: TAXATION 

This  annex  provides  an 
indicator-based 
overview of Germany’s tax system. It includes 
information on the tax structure (the types of tax 
that  Germany  derives  most  of  its  revenue  from), 
the  tax  burden  on  workers,  and  the  progressivity 
and the redistributive impact of the tax system. It 
also  provides  information  on  tax  collection  and 
compliance. 

Germany’s  tax  revenues  in  relation  to  GDP 
continue  to  remain  close  to  the  EU  average. 
Table  A19.1shows  that  tax  revenues  (including 
social  security  contributions)  slightly  increased  as 
a  percentage  of  GDP  from  39.6%  in  2020  to 
40.8%  in  2022.  The  EU  average  was  40.2%  in 
2022. Germany relies substantially more than the 
EU  average  on  labour  taxation  as  a  part  of  the 
overall  structure  of  tax  revenues.  The lion’s  share 
of this consists of social security contributions. 

Looking  at  capital  taxes,  these  tax  types 
have  been  underrepresented  in  the  overall 
tax  mix  in  recent  years.  It  should  be  noted, 
however, that income from corporate taxation is at 
the EU aggregate level. 

Moreover,  property  and  environmental  taxes 
are used to a lesser extent than in the EU as 
a whole. As in previous years, Germany’s property 
taxes  as  a  percentage  of  GDP  are  persistently 
lower  than  the  EU  aggregate.  Recurrent  taxes  on 
immovable  property  were  0.4%  of  GDP  in  2022 
(the  EU  aggregate 
for  2022  was  1%). 
Environmental  taxes  made  up  1.6%  of  GDP  in 
2022  in  Germany  and  were  therefore  below  the 
EU aggregate of 2% in the same year. Importantly, 
they  decreased  by  0.6pp  from  2.2%  in  2010. 
Moreover,  there  is  scope  to  better  align  the 

Table A19.1:Taxation indicators 

levies 

implemented 

‘polluter  pays’  principle  in  environmental  taxation. 
levies  on 
While  Germany  has 
landfilling,  waste  loadings  to  water  and  plastic 
products  there  remains  scope  to  expand  waste 
disposal 
incineration)  and 
(including 
levies  such  as  on  NOx 
implement  further 
emissions,  fertilisers  and  pesticides.  The  highest 
contribution  in  tax  revenues  persistently  comes 
from  labour  taxation  (including  social  security 
contributions),  which makes  up more  than  half  of 
the  overall  tax  mix.  Moreover,  apart  from  the 
introduction of a CO2 price, excise duties on energy 
remained  virtually  unchanged 
products  have 
during the past decade (see also Annex 6). 

Germany  continues  to  grant  substantial 
environmentally harmful subsidies.  Fossil fuel 
subsidies  amounted  to  EUR 21  billion  in  2022.  In 
the  same  vein,  company  cars,  which  represent 
more  than  60%  of  all  new  passenger  cars, 
continue  to  benefit  from  a  low  taxation  rate  for 
private usage (1%), which represents an estimated 
EUR 3.1 billion  of 
in 
forgone 
2018  (176). 

revenue 

tax 

the 

commuter 

Similarly,  rather  than  providing  targeted 
government  support  for  developing  viable 
allowance 
alternatives, 
encourages  users  to  pursue  regular  long-
distance travel. This allowance resulted in fiscal 
costs  of  EUR 6 billion  in  2018  (UBA,  2021).  Both 
subsidies,  which  have  been  in  place  for  over  a 
decade,  mainly  benefited  medium-  and  higher-
income groups and people who drive to work. From 
both  the  social  and  the  environmental  points  of 
view,  the  subsidies  remain  insufficiently  targeted 
and there is considerable scope to shift away from 
harmful  subsidies,  replacing  them  with  more 

(176) See European Environment Agency, 2023, Fossil Fuel 
Subsidies in EU Member States, 2015 and 2022, 
eea.europa.eu. Umweltbundesamt (UBA), 2021, 
Umweltschädliche Subventionen in Deutschland,  
umweltbundesamt.de 

Source:  

74 

DE2010202020212022202320102020202120222023Total taxes (including compulsory actual social contributions) (% of GDP)37.339.640.940.837.940.040.440.2Labour taxes (as % of GDP)21.023.222.822.620.021.320.720.3Consumption taxes (as % of GDP)10.79.610.310.310.810.711.211.0Capital taxes (as % of GDP)5.66.87.77.87.18.08.68.9Of which, on income of corporations (as % of GDP)2.02.23.13.22.42.53.03.4Total property taxes (as % of GDP)0.81.31.31.21.92.32.22.1Recurrent taxes on immovable property (as % of GDP)0.40.40.40.41.11.21.11.0Environmental taxes as % of GDP2.21.71.81.62.42.22.32.0Tax wedge at 50% of average wage (Single person) (*)41.741.641.341.140.533.931.732.131.831.7Tax wedge at 100% of average wage (Single person) (*)49.048.848.148.347.941.040.139.940.040.2Corporate income tax - effective average tax rates (1) (*)28.026.426.419.519.019.0Difference in Gini coefficient before and after taxes and cash social transfers (pensions excluded from social transfers) (2) (*)9.510.39.911.28.68.18.27.9Outstanding tax arrears: total year-end tax debt (including debt considered not collectable) / total revenue (in %) (*)1.62.640.935.5VAT Gap (% of VAT total tax liability, VTTL)(**)9.25.62.83.39.75.4GermanyEU-27Tax structureProgressivity & fairnessTax administration & compliance 
 
 
 
 
  
 
Graph A19.1: Tax revenues including social security contributions from different tax types, % of total 
revenue 

Note: values for EU are GDP-weighted EU averages (EU aggregates) 
Source: European Commission 

targeted  support  for  citizens  in  need,  thereby 
privileging public transport. 

In  terms  of  tax  reforms  passed  in  line  with 
the  RRP  commitments,  the  German  parliament 
adopted 
Tax 
Amendment  Act,  which  sets  tax  incentives  by 
extending  the  period  for  starting  a  10-year  tax 
exemption for purely electric vehicles. 

the  Seventh  Motor  Vehicle 

the 

Moreover, the upper house of the parliament 
Growth 
approved 
(’Bundesrat’) 
Opportunities Act end of March 2024. This law 
aims  to  accelerate  economic  growth  and  boost 
competitiveness. The focus of this package is (i) to 
increase investment and innovation by companies, 
(ii) simplify  the  tax  system  and  (iii) reduce  the 
bureaucratic  burden  on  businesses.  Its  measures 
including  depreciation 
include  tax  allowances, 
allowances  for  investment  and  increased  R&D 
allowances.  In  terms  of  relieving  bureaucratic 
burden, it includes mandatory  electronic invoicing. 
While  the  initially  proposed  version  of  this  law 
included  measures  worth  of  EUR6.3  billion  of  tax 
relief,  the  approved  version’s  budget  envelope  is 
worth EUR 3.2 billion. 

Germany  is  addressing  the  energy  crisis  by 
applying  a  range  of  tax-related  and  other 
measures.  The  government  has  implemented 
specific tax measures in order to lessen the impact 
of  high  energy  prices  on  consumers  and 
businesses.  It  nonetheless  does  not  seem  that 
most  of  these initiatives are  specifically  targeting 
the  most  vulnerable  businesses  and  households. 
The main energy measures are a natural gas and 
heat price brake and an electricity price brake that 
cap  energy  prices  for  households,  SMEs,  and 

industrial  companies.  These  price  brakes  were 
initially  intended  to  last  until  April 2024  but 
expired  on  31 December 2023  after  the  federal 
government  reached  an  agreement  on  the  2024 
budget.  For  the  supply  of  gas  and  heat  through 
natural  gas  and  heating  networks,  the  VAT  rate 
will  revert  from  the  reduced  rate  to  the  standard 
rate of 19% from 1 April 2024. 

Germany’s labour tax burden is  considerably 
higher  and  less  progressive  than  the  EU 
average.  Graph  A19.2  shows  that  the  labour  tax 
wedge (177) for Germany in 2023 was much higher 
than the EU average not only for single people at 
the average wage level, but also for those earning 
low  wages  (50%  and  67%  of  the  average  wage) 
and high wages (167% of the average wage). The 
tax  wedge  for  second  earners  at  67%  of  the 
average  wage  was  clearly  above  the  EU  average. 
In addition, the difference between the tax wedge 
for  second  earners  at  67%  of  the  average  wage 
and for single persons at the same wage level was 
particularly high in Germany, which is indicative of 
the  important  role  that  the  joint  taxation  system 
for  couples  plays  in  reducing  work  incentives  for 
second  earners.  The  difference  between  the  tax 
wedge for high- and low-wage earners (167% and 
50%  of  the  average  wage)  is  considerably  lower 
for Germany than for the EU as a whole, indicating 
the low progressivity of the labour tax system. The 
tax-benefit  system  helped  reduce  inequality  (as 

(177) The tax wedge is defined as the sum of personal income 

taxes and employee and employer social security 
contributions net of family allowances, expressed as a 
percentage of total labour costs (the sum of the gross wage 
and social security contributions paid by the employer). 

75 

50.627.322.155.525.419.2Tax revenue shares in 2022, Germany (outer ring) and EU (inner ring)Taxes on labourTaxes on consumptionTaxes on capital3.33.90.70.90.00.21.02.52.02.70123456Germany -environmentaltaxationEU -environmentaltaxationGermany -property taxationEU - propertytaxationEnvironmental and property taxation as % of total tax revenue, Germany and the EUEnergy taxesTransport taxesResource/pollution taxesRecurrent property taxesOther property taxes 
 
       
measured  by  the  Gini  coefficient)  by  more  than 
the EU average in 2022 (see Table A19.1). 

Graph A19.2: Tax wedge for single and second 
earners as a % of total labour costs, 2023 

Note: second earners are members of a family with the 
primary earner earning 100% of the average wage and no 
children. For the methodology of the tax wedge for second 
earners, see OECD, 2016, Taxing Wages 2014-2015. 
Source: European Commission 

Germany  performs  relatively  well  on  tax 
compliance.  According  to  the  VAT  gap  in  the  EU 
2023  report,  Germany  -  together  with  Italy  – 
accounted for over 50% of the decline in the EU-
wide  compliance  gap  between  2019  and  2021. 
Tax compliance has steadily improved in Germany. 
The  VAT  gap  (an indicator  of  the  effectiveness  of 
VAT enforcement and compliance where a low gap 
indicates  high  effectiveness)  fell  from  5.6%  to 
is 
2.8%  between  2020  and  2021,  which 
considerably below the EU-27 median gap of 4.9% 
in  2021  (see  also  Annex  14).  A  reason  for  this 
decrease may also be the fact that Germany was 
one of the EU countries with the largest decline in 
VAT burden as a result of COVID measures which 
may  also  have  helped  to  increase  compliance. 
Further  post-COVID  years  will  be  necessary  to 
establish  clearer  findings.  Preliminary  estimates 
show  that  the  compliance  gap  in  2022  remained 
stable.  

76 

40.543.747.949.252.5202530354045505550100150Tax wedge, % of total labour costsEarnings as % of the average wageSingle earner - DESingle earner - EU averageSecond earner -  DESecond earner -  EU average 
  
 
 
ANNEX 20: TABLE WITH ECONOMIC AND FINANCIAL INDICATORS 

Table A20.1:Key economic and financial indicators 

(1) domestic banking groups and stand-alone banks, EU and non-EU foreign-controlled subsidiaries and EU and non-EU foreign-
controlled branches. 
(2) NIIP excluding direct investment and portfolio equity shares. 
Source: Eurostat and ECB as of 2024-5-17, where available; European Commission for forecast figures (Spring forecast 2024). 

77 

2004-072008-122013-2020212022202320242025Real GDP (y-o-y)2.20.71.03.21.8-0.30.11.0Potential growth (y-o-y).1.01.30.60.70.80.60.6Private consumption (y-o-y)0.60.90.51.53.9-0.70.60.9Public consumption (y-o-y)0.72.12.53.11.6-1.51.51.2Gross fixed capital formation (y-o-y)2.90.72.0-0.20.1-0.7-1.01.0Exports of goods and services (y-o-y)9.82.21.79.73.3-2.2-1.02.7Imports of goods and services (y-o-y) 7.82.32.58.96.6-3.4-0.82.8Contribution to GDP growth:Domestic demand (y-o-y)1.01.01.21.42.3-0.80.40.9Inventories (y-o-y)0.0-0.4-0.10.90.70.0-0.20.0Net exports (y-o-y)1.10.1-0.20.9-1.20.6-0.10.1Contribution to potential GDP growth:Total Labour (hours) (y-o-y).0.20.3-0.10.10.30.10.1Capital accumulation (y-o-y).0.20.30.20.20.20.10.1Total factor productivity (y-o-y).0.60.70.40.40.30.30.4Output gap-0.3-0.70.1-0.80.3-0.8-1.2-0.8Unemployment rate9.66.33.83.73.13.13.13.1GDP deflator (y-o-y)0.91.21.83.05.36.63.62.1Harmonised index of consumer prices (HICP, y-o-y)1.91.71.03.28.76.02.42.0HICP excluding energy and unprocessed food (y-o-y)1.41.31.32.35.06.32.61.9Nominal compensation per employee (y-o-y)0.72.22.53.13.95.84.93.6Labour productivity (real, hours worked, y-o-y)1.30.51.00.60.5-0.7-0.20.7Unit labour costs (ULC, whole economy, y-o-y)-0.82.32.40.13.46.95.22.7Real unit labour costs (y-o-y)-1.71.10.5-2.8-1.80.21.50.6Real effective exchange rate (ULC, y-o-y)-2.90.31.00.0-0.4-0.30.50.3Real effective exchange rate (HICP, y-o-y)0.4-1.20.11.1-1.71.8..Net savings rate of households (net saving as percentage of net disposable income)10.610.311.314.911.111.4..Private credit flow, consolidated (% of GDP)0.21.24.56.86.7...Private sector debt, consolidated (% of GDP)125.9119.0109.9120.4118.4...of which household debt, consolidated (% of GDP)65.959.053.956.555.0...of which non-financial corporate debt, consolidated (% of GDP)60.160.056.064.063.4...Gross non-performing debt (% of total debt instruments and total loans and advances) (1).2.11.61.01.0...Corporations, net lending (+) or net borrowing (-) (% of GDP)1.62.41.53.30.62.51.61.6Corporations, gross operating surplus (% of GDP)26.425.123.825.124.724.923.823.5Households, net lending (+) or net borrowing (-) (% of GDP)5.95.45.97.85.66.06.25.9Deflated house price index (y-o-y)-2.00.74.98.3-1.3-13.9..Residential investment (% of GDP)5.25.46.27.07.37.2..Current account balance (% of GDP), balance of payments5.56.17.87.34.25.96.26.3Trade balance (% of GDP), balance of payments5.65.56.65.52.34.0..Terms of trade of goods and services (y-o-y)-0.7-0.50.9-2.9-4.94.10.40.0Capital account balance (% of GDP)-0.10.00.0-0.1-0.6-0.7..Net international investment position (% of GDP)14.123.046.268.369.570.4..NENDI - NIIP excluding non-defaultable instruments (% of GDP) (2)9.619.143.254.749.451.5..IIP liabilities excluding non-defaultable instruments (% of GDP) (2)125.9164.2150.1164.4169.5159.3..Export performance vs. advanced countries (% change over 5 years)..-0.2-1.5-8.6-8.3..Export market share, goods and services (y-o-y)-0.4-3.60.6-4.4-8.7-3.2-4.3-0.9Net FDI flows (% of GDP)1.71.21.32.32.91.4..General government balance (% of GDP)-2.0-1.70.5-3.6-2.5-2.5-1.6-1.2Structural budget balance (% of GDP)..0.5-3.1-2.4-2.1-0.9-0.7General government gross debt (% of GDP)65.976.267.469.066.163.662.962.2forecast 
 
 
 
  
 
 
ANNEX 21: DEBT SUSTAINABILITY ANALYSIS 

This  annex  assesses  fiscal  sustainability 
risks  for  Germany  over  the  short,  medium 
and  long  term.  It  follows  the  multi-dimensional 
approach  of  the  European  Commission’s  2023 
Debt Sustainability Monitor, updated based on the 
Commission 2024 spring forecast. 

1  –  Short-term  risks  to  fiscal  sustainability 
low.  The  Commission’s  early-detection 
are 
indicator  (S0)  does  not  point  to  any  major  short-
term  fiscal  risks  (Table A21.2) (178).  Government 
gross  financing  needs  are  expected  to  remain 
broadly constant at 15% of GDP on average over 
Financial 
2024-2025 
markets’  perceptions  of  sovereign 
risk  are 
investment grade, as confirmed by the main rating 
agencies.  

(Table A21.1, Graph1). 

2  –  Medium-term  fiscal  sustainability  risks 
appear medium.   

The DSA baseline shows that the government 
debt  ratio  is  expected  to  remain  broadly 
stable  in  the  medium  term,  reaching  around 
63% of GDP in 2034 (Graph 1, Table 1) (179). The 
debt  dynamics  can  be  explained  by  the  assumed 
structural  primary  balance  (excluding  changes  in 
cost  of  ageing)  of  0.0%  of  GDP  as  of  2024. 
Compared to historical data, this appears plausible 
as around 75% of past fiscal positions were more 
stringent  than  the  one  assumed  in  the  baseline 
(Table A21.2) (180). The debt dynamics also benefit 

(178) The S0 is a composite indicator of short-term risk of fiscal 
stress. It is based on a wide range of fiscal and financial-
competitiveness indicators that have proven to be a good 
predictor of emerging fiscal stress in the past.  

(179) The assumptions underlying the Commission’s ‘no-fiscal 

policy change’ baseline include in particular: (i) a structural 
primary surplus, before changes in ageing costs, of 0.0% of 
GDP from 2024 onwards; (ii) inflation converging linearly 
towards the 10-year forward inflation-linked swap rate 10 
years ahead (which refers to the 10-year inflation 
expectations 10 years ahead); (iii) the nominal short- and 
long-term interest rates on new and rolled over debt 
converging linearly from current values to market-based 
forward nominal rates by T+10; (iv) real GDP growth rates 
from the Commission 2024 spring forecast, followed by the 
EPC/OGWG ‘T+10 methodology projections between T+3 and 
T+10 (average of 0.7%); (v) ageing costs in line with the 
2024 Ageing Report (European Commission, Institutional 
Paper 279, April 2024). For information on the methodology, 
see the 2023 Debt Sustainability Monitor (European 
Commission, Institutional Paper 271, March 2024). 

(180) This assessment is based on the consolidation space 

indicator, which measures the frequency with which a tighter 
fiscal position than assumed in a given scenario has been 
observed in the past. Technically, this consists of looking at 

from  a  still  favourable  but  declining  snowball 
effect  of  around  -0.6  pp.  of  GDP  annually  on 
average over 2025-2034.  

the 

four 

interest-growth 

The  baseline  projections  are  stress-tested 
deterministic 
alternative 
against 
scenarios to assess the impact of changes in 
key  assumptions  relative  to  the  baseline 
(Graph 1).  Under  the  historical  structural  primary 
balance  (SPB)  scenario  (i.e.  the  SPB  returns  to  its 
historical  15-year  average  of  1.1%  of  GDP)  the 
debt ratio would be lower than under the baseline 
by  about  9 pps.  in  2034.  However,  under  the 
adverse  interest-growth  rate  differential  scenario 
(i.e. 
differential 
deteriorates by 1 pp. compared with the baseline), 
the  debt  ratio  would  be  higher  than  under  the 
baseline  by  around  5 pps.  in  2034.  Under  the 
financial  stress  scenario 
rates 
temporarily  increase  by  1 pp.  compared  with  the 
baseline),  the  government  debt  ratio  would  be 
higher by around 1 pp. in 2034. Finally, under the 
lower  structural  primary  balance  scenario  (i.e.  the 
projected cumulative improvement in the SPB over 
2023-2024  is  halved)  the  debt  ratio  would  be 
higher  than  under  the baseline  by  about 6 pps.  in 
2034. 

interest 

rate 

(i.e. 

stochastic 

plausible 

to 
These 

The  stochastic  projections  indicate  low  risk, 
pointing to the moderate sensitivity of these 
unforeseen 
projections 
events  (181). 
simulations 
indicate a 39% probability that the debt ratio will 
be higher in 2028 than in 2023, implying medium 
risks  given  the  high  debt  level.  In  addition,  the 
the  baseline  debt 
uncertainty 
projections 
the  difference 
between  the  10th  and  90th  debt  distribution 
percentiles) is low, reaching around 16 pps. of GDP 
in five years’ time) (Graph 2).  

surrounding 
(as  measured  by 

the percentile rank of the projected SPB within the 
distribution of SPBs observed in the past in the country, 
taking into account all available data from 1980 to 2022. 

(181) The stochastic projections show the joint impact on debt of 

10000 different shocks affecting the government’s 
budgetary position, economic growth, interest rates and 
exchange rates. This covers 80% of all the simulated debt 
paths and therefore excludes tail events. 

78 

 
 
 
 
 
 
 
Table A21.1:Debt sustainability analysis - Germany 

ageing  costs.  These  results  are  conditional  on the 
country  maintaining  a  sizeable  SPB  over  the  long 
term. 

indicator  points  to 

low  fiscal 
The  S2 
sustainability  risks.  The  indicator  shows  that, 
relative  to  the  baseline,  the  SPB  would  need  to 
improve  by  1.8  pps.  in  2025  to  ensure  debt 
stabilisation  over  the  long  term.  This  result  is 
underpinned  by  the  projected  increase  in  ageing-
related  costs  (contribution  of  1.5 pps.)  and  a 
(0.2 pp.). 
initial  budgetary  position 
favourable 
Ageing costs’ developments are primarily driven by 
a projected increase in public pension expenditure 
(0.5 pp.),  health  care  (0.5  pp.)  and  long-term  care 
spending (0.4 pp.) (Table 2).  

Source: Commission services. 

3  –  Long-term  fiscal  sustainability  risks 
appear overall low. This assessment is based on 
the  combination  of  two  fiscal  gap  indicators, 
capturing  the  required  fiscal  effort  to  stabilise 
debt (S2 indicator) and bring debt to 60% of GDP 
long  term (182).  This 
(S1 
assessment  is  driven  by  the  favourable  initial 
budgetary  position  and  the  moderate  increase  in 

indicator)  over  the 

(182)The S2 fiscal sustainability indicator measures the 

permanent SPB adjustment in 2025 that would be required 
to stabilise public debt over an infinite horizon. It is 
complemented by the S1 indicator, which measures the 
permanent SPB adjustment in 2025 to bring the debt ratio to 
60% by 2070. The impact of the drivers of S1 and S2 may 
differ due to the infinite horizon component considered in the 
S2 indicator. For both the S1 and S2 indicators, the risk 
assessment depends on the amount of fiscal consolidation 
needed: ‘high risk’ if the required effort exceeds 6 % of GDP, 
‘medium risk’ if it is between 2% and 6% of GDP, and ‘low 
risk’ if the effort is negative or below 2% of GDP. The overall 
long-term risk classification combines the risk categories 
derived from S1 and S2. S1 may notch up the risk category 
derived from S2 if it signals a higher risk than S2. See the 
2023 Debt Sustainability Monitor for further details. 

79 

Table 1. Baseline debt projections20212022202320242025202620272028202920302031203220332034Gross debt ratio (% of GDP)69.066.163.662.962.362.061.661.461.361.461.662.162.663.1Changes in the ratio0.2-2.9-2.4-0.7-0.6-0.3-0.4-0.3-0.10.10.30.40.50.5of whichPrimary deficit3.01.81.60.60.50.40.40.40.50.60.70.91.01.1Snowball effect-3.5-3.9-3.0-1.3-1.1-0.7-0.8-0.7-0.6-0.5-0.5-0.5-0.5-0.5Stock-flow adjustments0.7-0.8-1.00.00.00.00.00.00.00.00.00.00.00.0Gross financing needs (% of GDP)18.515.615.414.914.714.714.714.814.915.115.315.615.816.1S1S2Overall index  (pps. of GDP)1.01.8of which Initial budgetary position-0.20.2Debt requirement0.1Ageing costs1.21.5of which    Pensions0.30.5     Health care0.30.5     Long-term care0.40.4Education0.10.2Table 2. Breakdown of the S1 and S2 sustainability gap indicators3035404550556065707520212022202320242025202620272028202920302031203220332034Graph 1. Deterministic debt projections Historical SPB scenarioLower SPB scenarioFinancial stress scenarioAdverse 'r-g' scenarioBaseline% of GDPp10p20p40p60p80p9030405060708020212022202320242025202620272028% of GDPGraph 2. Stochastic debt projections 2024-2028MedianBaseline 
 
 
     
 
Table A21.2:Heat map of fiscal sustainability risks - Germany 

Source: Commission services. 

indicator  points  to 

The  S1 
low  fiscal 
sustainability risks. The indicator shows that the 
country  would  need  to  improve  its  fiscal  position 
by  1  pp.  to  reduce  its  debt  to  60%  of  GDP  by 
2070. This result is mainly driven by the projected 
increase 
spending 
(contribution of 1.2 pps.) and the favourable initial 
budgetary position (-0.2 pp.) (Table 2).  

age-related 

public 

in 

4  –  Finally,  several  additional  risk  factors 
need to be considered in the assessment.  On 
the one hand, risk-increasing factors are related to 
the  recent  increase  of  interest  rates  and  a 
relatively  high  share  of  short-term  government 
debt.  On  the  other-hand,  risk-mitigating  factors 
include the lengthening of debt maturity in recent 
years,  relatively  stable  financing  sources  (with  a 
diversified and large investor base), a low share of 
public debt held in foreign currency and Germany’s 
positive net international investment position. 

80 

BaselineHistorical SPBLower SPBAdverse 'r-g'Financial stressOverallMEDIUMLOWMEDIUMMEDIUMMEDIUMLOWDebt level (2034), % GDP63.154.669.068.563.6Debt peak year20342024203420342034Fiscal consolidation space75%51%85%75%75%Probability of debt ratio exceeding in 2028 its 2023 level39%Difference between 90th and 10th percentiles (pps. GDP)16.4Source: European Commission (for further details on the Commission's multidimensional approach, see the 2023 Debt Sustainability Monitor)(1)Debtlevelin2034.Green:below60%ofGDP.Yellow:between60%and90%.Red:above90%.(2)Thedebtpeakyearindicateswhetherdebtisprojectedtoincreaseoveralloverthenextdecade.Green:debtpeaksearly.Yellow:peaktowardsthemiddleoftheprojectionperiod.Red:latepeak.(3)Fiscalconsolidationspacemeasurestheshareofpastfiscalpositionsinthecountrythatweremorestringentthantheoneassumedinthebaseline.Green:highvalue,i.e.theassumedfiscalpositionisplausiblebyhistoricalstandardsandleavesroomforcorrectivemeasuresifneeded.Yellow:intermediate.Red:low.(4)Probabilityofdebtratioexceedingin2028its2023level.Green:lowprobability.Yellow:intermediate.Red:high(alsoreflectingtheinitialdebtlevel).(5)thedifferencebetweenthe90thand10thpercentilesmeasuresuncertainty,basedonthedebtdistributionunder10000differentshocks.Green,yellowandredcellsindicateincreasinguncertainty.(Forfurtherdetailson the Commission's multidimensional approach, see the 2023 Debt Sustainability Monitor)LOWMEDIUMLOWLOWLOWShort termMedium term - Debt sustainability analysis (DSA)Long termOverall                               (S0)Overall Deterministic scenariosStochastic projectionsS2S1Overall(S1 + S2)