The federal cabinet adopted today the entitled “Strengthening the social market economy – leveraging potential for growth, boosting competitiveness”. The Federal Government expects a 1.0% increase in price-adjusted gross domestic product in 2019.
said: “The German economy is continuing to grow this year for the tenth successive year. That is the longest period of uninterrupted expansion since 1966 and reflects the performance of our . These successes are reaching through to people on the ground in the form of higher employment and higher wages and salaries. However, the headwinds are getting stronger, mainly from outside Germany – such as , trade disputes, or the international tax policy environment. The fact that growth is set to be slower this year should spur us to improve the ecosystem for our country’s success and competitiveness. This includes relief for the employees and companies who generate our prosperity. We also need to put our efforts into forward-looking key enabling technologies like battery cell manufacturing and .”
The labour market is continuing to develop positively. The unemployment rate is expected to drop to 4.9% in 2019, whilst the number of people in work rises further to 45.2 million. As a consequence, personal incomes will again see a substantial increase: the net wages and salaries of employees will grow by 4.8% in 2019, with a role being played by the cuts in taxes and charges. In view of rising wages, employment and corporate investment, the domestic economy will remain an important pillar of economic activity. At the same time, the low interest rates are providing a clear stimulus, particularly for the construction sector. The expansionary fiscal policy is giving the economy a further boost.
Selected key figures for macroeconomic trends in the Federal Republic of Germany 
|Percentage change on preceding year|
|Gross domestic product (GDP), output approach |
Unemployment rate in % (Federal Employment Agency definition) 
GDP by expenditure (real)
Private consumption expenditure
External balance of goods and services (contribution to GDP growth) 
|Total gross wages and salaries per employee||2,5||3,2||3,1|
Up to 2018 provisional results of the Federal Statistical Office; National Accounts Status: January 2019;
 In relation to the total labour force;
 Absolute change (stocks/external balance) in per cent of pre-year GDP (=contribution to change in GDP);
The economic successes of recent years fit into the impressive success story of the Social Market Economy, which has now lasted for seventy years. The economic opportunities and risks have changed over time: at present, the of the economy and society are creating fresh challenges for economic policy, as are demographic development, protectionist tendencies in world trade, and not least climate change. In the light of these and other long-term trends, the Federal Government is taking structural decisions to maintain and strengthen the viability of the Social Market Economy.
The Social Market Economy thrives on the commitment and productivity of its protagonists. For this reason, economic policy must set incentives which ensure that achievers – entrepreneurs and employees – can harvest the fruits of their hard work. The Federal Government will therefore provide companies with pro-growth and fair tax conditions on a lasting basis. To this end, the coalition agreement contains a first key measure to boost competitiveness in the form of tax breaks for research funding. The Federal Government will present draft legislation for this in the first half of 2019. A further important element is the abolition of the solidarity surcharge, starting with a clear first step for 90% of those paying the surcharge in order to reduce the overall tax burden on individuals.
The overall public-sector debt ratio is falling steadily and will be below the Maastricht threshold of 60% of GDP this year. At the same time, the Federal Government’s financial planning envisages a record level of public-sector investment at €154.5 billion in the years from 2018-2021. It thus combines sound budgets with higher investment and will continue to improve the foundations for future growth in the coming years. “Prosperity for all” also means that all of Germany’s regions should participate in the economic expansion. Not least with a view to providing a fresh regional stimulus, the Federal Government set up the “Commission for Growth, Structural Change and Employment”, which presented its final report on 26 January. Also, the Commission on equal standards of living is to draft a national federal funding system for structurally weak areas for the time after the Solidarity Pact II expires at the end of 2019. The Federal Government will also be giving intensive support beyond these measures in the context of structural change. Furthermore, the Federal Government has adopted key principles for a housing campaign.
In the course of digitisation, structural change in the economy will be even faster than it has been in the past. In order to safeguard the success of the Social Market Economy in the digital era, the Federal Government is continuing to adapt the regulatory framework to the digital world and, amongst other things, will modernise national competition law. It has adopted the implementation strategy entitled “Shaping the course of digitisation” and is using the special “Digital Infrastructure” fund to provide funding for the expansion of gigabit networks in uneconomic areas. Also, a focus is being placed on boosting targeted key enabling technologies in order to maintain technological sovereignty in key areas of technology. Against the background of technological change, the Act on opportunities to gain qualifications will expand the promotion of further training for the employed and the unemployed. In addition to tapping the skills available on the domestic and European markets, Germany also needs to become more attractive for qualified professionals from outside the EU. A Skilled Immigration Act will improve the legal framework for this. The is a central, long-term policy to mitigate climate change and make Germany attractive for business. In order to speed up the and to make better use of the existing grid, the Economic Affairs Ministry has launched measures including a draft Grid Expansion Acceleration Act. Finally, the Social Market Economy is deeply embedded in Europe. For this reason, the Federal Government is intensively involved in the debate about the future development of the economic and monetary union. At international level, we are working to counter protectionist tendencies and are advocating ambitious EU free trade agreements and a modernisation of the World Trade Organization: the multilateral trading system must be further strengthened as a regulatory framework for rules-based world trade.