BERLIN — Germany held onto 12th place in the Innovation Indicator 2025, even as competitors such as the US, Britain, and France climbed the global innovation rankings, a new study by the Federation of German Industries (BDI) and consultancy Roland Berger found. In its machinery lies laudable measures to find new designs, like bold business leaders demanding striking projects from fusion energy to artificial intelligence, reporting that all syphons the country’s innovation has been stymied, and cautioning that future technology is faltering on Nov. 25, 2025.
Companies prepare for the future of technology, according to Innovation Indicator 2025
The Innovation Indicator 2025 compares the innovation capabilities of 35 economies based on research strength, key technologies, and the sustainability of their economic models. Germany continues to show strength in traditional industrial sectors – ranking among the top performers in indicators for the circular economy, new materials, and advanced production technologies. But the new numbers show it is also lagging in areas aimed at tomorrow: only 7th in digital hardware, 10th in digital networking, and 15th behind leaders in Asia and North America in biotechnology, Reuters has reported.
BDI’s director general, Peter Leibinger — for his part — said Germany needs to “dare to think big” again and cited goals such as delivering a first working prototype of a fusion reactor by 2040 or becoming the global leader in AI applications for industry. The study cautions that domestic corporate spending on research and development is increasing at a slower pace than in competing countries, especially in digital technologies, and warns that its status as a benchmark industrial nation will further erode without faster approvals, less bureaucracy, and a more predictable framework for private investment.
The caution on the Innovation Indicator 2025 is informed by a previous hiccup. The Innovation Indicator 2024 report showed that Germany slipped from 10th to 12th as small, highly specialized countries such as Switzerland, Singapore, and Denmark widened their lead at the top, while larger economies, including South Korea, the US, and Britain, struggled to keep up. This year’s results leave Germany stranded on that lower rung, even as some competitors pull off modest recoveries.
It was a more optimistic mood just two years ago. Despite that, the Innovation Indicator 2023 evaluation continued to rank Germany as Courtier No. 10 overall — among big industrial nations, it was at least able to claim a top 10 position, since the best small innovation champions above it no longer tended to be industrialized economies. At the time, Germany’s strength in advanced production technologies and materials, and in a circular economy, more than counterbalanced weaker performance in software and digital networks — but the latest Innovation Indicator 2025 suggests that balance is tilting.
Other data points to a similar pattern of gradual slippage rather than a collapse. Despite this, Germany is classified as a “Strong Innovator” in the European Innovation Scoreboard 2024 country profile, with performance above the EU average since 2017, but also slipping patent activity and a decreasing citation impact for scientific publications; mixed digital skills and ICT investment results. Germany is also in free fall in the World Intellectual Property Organization’s Global Innovation Index, dropping from 8th place in 2023 to 11th place last year, behind Switzerland, Sweden, and the United States.
BDI calls for “moonshot” targets as economic headwinds multiply
For BDI, the Innovation Indicator 2025 is further proof that piecemeal reforms aren’t enough. The business lobby says Germany should set ambitious, clear “moonshot” goals in technologies such as fusion, climate tech, and industrial AI, supported by faster planning and permitting processes, steady tax incentives for research investments, and stronger digital infrastructure. And those demands mirror broader international assessments that emphasize the necessity of converting Germany’s formidable base of research and industrial clusters more quickly to faster commercial adoption of new technologies and businesses.
And while the ranking in the Innovation Indicator 2025 is sobering, the report authors and international organizations are optimistic. Germany still invests heavily in R&D relative to many peers, boasts world-class institutions, and is home to several major innovation clusters — including in cities such as Munich and Berlin. BDI’s question is whether policymakers will succeed in acting quickly enough to transform that basis into rejuvenated innovation dynamism before today’s “innovation gap” becomes a lasting competitive disadvantage.
