A voter casts his ballot in early voting in German federal elections Sean Gallup/Getty Images

Germany’s Economic Road Ahead

The next German government will have a chance to lay the groundwork for the country's future prosperity. But if policymakers are to make the most of the opportunity, they will have to act neither rashly nor reticently.

MUNICH – The next German government will face economic-policy challenges in five key areas: digitalization and automation, demographic change, globalization, climate change, and European integration.

With respect to digitalization, Germany tends to fluctuate between excessive enthusiasm for expanding fiber-optic networks and fear of the impact of new, largely unregulated business models, such as those underpinning avatars of the “sharing economy” like Uber and Airbnb.

But German policymakers must not respond to such sentiments with kneejerk reactions. Rolling out a nationwide fiber-optic network, rather than simply servicing the locales that are most in need, would be both expensive and inefficient. And politicians should focus their regulatory efforts on ensuring that sensible digital business models and private investment are not obstructed.

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