In a nutshell: Germany invests less in software than any other OECD nation and risks competitiveness, but its digital catching-up need could also enable major productivity gains through AI deployment.
Deutsche Bank sees Germany falling significantly behind in artificial intelligence. The reason is a disproportionately low investment rate in software — less than one percent of economic output compared to four percent in Sweden.
Robin Winkler, chief economist for Germany at Deutsche Bank, has pointed out the discrepancy in global investments: While Germany allocates less than one percent of economic output to software, Sweden invests around four percent, followed by Japan and Israel. Even when hardware investments are factored in, Germany’s digital catch-up lag remains substantial.
The German Mittelstand in particular exhibits this imbalance: while sectors such as mechanical engineering are globally leading, software adoption lags significantly. Small companies with fewer than 100 employees are especially affected. This lack of digital infrastructure will ultimately determine Germany’s long-term competitiveness, Deutsche Bank warns.
Winkler, however, sees opportunity in this gap: many areas of the German economy currently lack a digital foundation. This is precisely where AI deployment could deliver extraordinarily large productivity gains — significantly stronger than in already highly digitalized countries. Given an aging society, such productivity increases are economically necessary.
Against widespread fears of massive job losses from AI, Winkler argues with Germany’s current skills shortage reality: widespread deployment of artificial intelligence under these conditions is unlikely to lead to structural unemployment. AI is a central growth lever — without this lever, Winkler concludes, things will become economically difficult for Germany.
Source: www.it-daily.net · Published 25 June 2026
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