Germany’s two biggest listed banks — Deutsche Bank AG and Commerzbank AG — have been mired in controversy for years, and while they’re on the mend, they’re still undersized compared to Wall Street peers. Their combined market capitalization is less than a tenth of JPMorgan Chase & Co.’s.
Digital Technology
In technology, Germany’s biggest player is SAP SE, which dates from the 1970s and makes complex software that helps companies manage their operations. Germany’s lack of investment is particularly acute in digital technology. Despite infrastructure that had it ranked 51st in the world for fixed-line Internet speeds, it had the fourth-lowest spending among OECD countries relative to the economy’s size.
Aging Population
Fragmentation risks intensifying as the population ages, pitting comfortable pensioners against young people worried about their futures. The tensions have sparked disruptive protests, and authorities this week searched 15 properties across Germany in connection with an investigation against a group of climate activists.
Germany’s industrial base is already feeling the pinch of its demographic shift. Recent surveys have found 50% of firms cut output due to staffing problems, costing the economy as much as $85 billion per year.
In a recent report, the OECD put the scale of the challenges in stark terms: “No major industrialized economy has ever had the very basis of its competitiveness and resilience so systematically challenged by changing social, environmental and regulatory pressures.”