A meme is currently circulating on social media that highlights the stark differences in political approaches between the US and Europe: While across the Atlantic, private companies are setting out to conquer space, and even capturing booster rockets upon their return to Earth, Europe celebrates the innovation that plastic bottle caps no longer fall off when opened.

Recently, US President Donald Trump also showed that he doesn't shy away from ambitious innovations: He aims to plant the US flag on Mars, and has allocated half a trillion dollars to make the US a leader in AI. In contrast, Europe seems to frequently announce grand plans and programmes, but once the Brussels bureaucracy monster gets involved, not much is left of them. Didn’t the EU aim to become the most competitive region in the world just a few years ago?

The same picture of timidity and failure is evident in Germany: How many federal governments have promised to bring the country back to the front of the international stage? Instead, Germany has dramatically fallen behind. How many coalitions have pledged to reduce bureaucracy, digitalize the country, and modernise infrastructure? In most cases, this has turned into the opposite.

In the current election campaign, the major issues related to Germany’s competitiveness are being debated only vaguely and abstractly: competitiveness, the Bundeswehr, demographics, and innovation. Rather than pursuing major social reforms, the parties are unwilling to make changes to the retirement age or pension levels. On the contrary, an additional pension for mothers is being demanded. On taxes, there is no major breakthrough either: some want tax cuts as always, others simply want tax increases. Growth? Some want deregulation and better conditions, while others want to spend more money – of course by circumventing or reforming the debt brake. Nothing new.

Moreover, existing structures are simply being tinkered with. In many ways, one feels reminded of a „Merkel campaign“ of asymmetric demobilisation – where the really big issues are avoided for fear of provoking controversy. Thus, real political change is still far off.

It seems that what’s lacking is the courage to embrace change and the ability (or willingness?) to envision Germany's future, accepting a degree of disruption and controversy along the way. The extreme and populist parties certainly claim this for themselves – with success. Trump, in the end, was also successful with the aforementioned approach.

„Politics is afraid of the voters“, summarizes Clemens Fuest, head of Ifo. Far too often, the established parties get caught up in trivial debates instead of honestly addressing the pressing challenges and making unpopular decisions.

The pressure to act has never been greater: Germany's defense capability has been eroded for decades, and its infrastructure is decaying. Moreover, since 2018, economic dynamism has been declining. Crucial innovations are no longer being made in Germany, and digital sovereignty has already been lost. The US and China dominate the innovation market. Meanwhile, companies are losing faith in Germany as a business location. Capital expenditure fell by more than 5% in 2024 and is now below the level from six years ago. This is not only due to the poor framework conditions (e.g., costs, taxes, infrastructure, bureaucracy, and a general hostility toward business and innovation), but also a vote of no confidence in the ability of politics to draw the right conclusions from the situation. Investing for the future is only done when positive returns are foreseeable over the long term.

The recent dip in polling numbers for the conservative CDU/CSU opposition also reflects doubts about whether a new government under their leadership will actually tackle the key issues. There is caution and vagueness instead of the courage to speak the truth and offer a vision. Even on the evident financial needs of the Bundeswehr, there has been backtracking: according to CDU chancellor candidate Friedrich Merz, more than 2% of GDP is off the table.

Perhaps US President Trump will wake up the German election campaign. With his AI initiative, he threatens Germany's innovation power, which is still heavily rooted in analog structures, and paralysed by bureaucracy. At the same time, he is unsettling the entire business model with the threat of special tariffs, while also luring successful companies to the US. If the government continues to stoically hold back – which SPD chancellor candidate Olaf Scholz wants to be viewed as a sign of strength – and if Merz thinks he can win Trump over with a handwritten letter, the future of Germany as a sought-after business location will truly be at risk.

In the subsequent installments of this series, which will be published periodically in the run-up to Election Day, Börsen-Zeitung will closely examine the key campaign issues, including the budget, taxes, energy and social policy, financial markets and infrastructure, labour market and entrepreneurship, cybersecurity/AI, and the challenges of over-bureaucratisation.