Germany's is rooted in the understanding that, if a society is to enjoy lasting economic success, it needs to be open, competition-oriented and fair, and show solidarity. The Social Market Economy therefore needs a shared understanding of the balance between individual responsibility and solidarity. The Federal Government would like to further deepen this shared understanding via dialogue, transparency and broad opportunities for all citizens to participate.
In spite of a difficult international economic environment, . Economic growth roughly matches potential output growth. Employment is at a record level and unemployment is falling. The good development on the labour market, bolstered by low inflation, is creating scope for appreciable wage rises in real terms.
After two very weak years, economic growth picked up clearly in 2014, at a rate of 1.6%. Germany registered a similar rate of economic expansion in 2015. This positive development is likely to continue. The German government is expecting economic growth of 1.8% in 2016.
Investment and innovation provide a key to higher competitiveness, lasting prosperity, and a better quality of life for people in Germany and Europe. The government has set itself the target of strengthening private-sector and public-sector investment in Germany and Europe. A modern, efficient infrastructure forms the basis for future growth, as does investment in education, science and research.
The labour market is developing positively. In autumn 2015, 43.5 million people were in work - 400,000 more than a year before. This development will continue in 2016. Employment subject to the payment of social security contributions is expanding more strongly than general gainful activity.
For the first time since 1969, the federal budget did not require any net new borrowing in 2014. Despite the increased challenges, the draft 2016 budget similarly does not envisage any new debts.
The German economy is facing the challenges of accelerated technological change and an ageing society. Also, must be designed in a way that strengthens Germany's competitiveness. For this reason, Germany needs a substantial amount of additional investment in its future.