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IW-Report No. 33 4. July 2025 Barbara Engels / Marc Scheufen / Edgar Schmitz Artificial Intelligence as a Competitive Factor for the German Economy

Germany has to secure its economic performance in a difficult environment. The shortage of skilled labour, stagnating productivity and weakening innovation are threatening growth and prosperity.

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Artificial Intelligence as a Competitive Factor for the German Economy
IW-Report No. 33 4. July 2025 Barbara Engels / Marc Scheufen / Edgar Schmitz

Artificial Intelligence as a Competitive Factor for the German Economy

Barbara Engels / Marc Scheufen / Edgar Schmitz German Economic Institute (IW) German Economic Institute (IW)

Germany has to secure its economic performance in a difficult environment. The shortage of skilled labour, stagnating productivity and weakening innovation are threatening growth and prosperity.

Artificial intelligence (AI) can be a key to overcoming these challenges. However, it needs to be used extensively by many companies. This study analyses the current status of AI use in German companies based on a survey of 1,038 companies as part of the IW Future Panel.

Currently, 37 per cent of the companies surveyed use AI. At 66 per cent, large companies use AI much more frequently than small companies (36 per cent). In terms of sectors, business-related service providers are particularly frequent users of AI at 55 per cent, followed by mechanical engineering, the electrical industry and vehicle construction at just under 40 per cent. In contrast, companies from sectors such as construction, wholesale and logistics use AI much less frequently (less than 25 per cent).

The companies surveyed mainly use AI to automate routine work, support complex tasks and improve quality. Generative AI is particularly popular. However, AI is usually only used selectively in individual areas of the company and rarely company-wide.

The fact that surveyed companies predominantly use free-of-charge AI tools, and less frequently purchase or develop their own tools, also indicates that the overall adoption of AI in the German economy is rather superficial so far.

The study provides specific recommendations for achieving broader AI implementation and leveraging its economic opportunities: targeted educational initiatives, focused financial incentives, intelligent regulatory frameworks, and improved digital infrastructure are key levers. Moreover, Germany should integrate its industrial value-creation model with the potential of AI, developing distinctly European AI solutions.

If Germany succeeds in establishing AI "Made in Germany" as a hallmark for innovation and reliability, artificial intelligence could indeed become a cornerstone of sustainable economic growth and prosperity.

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Artificial Intelligence as a Competitive Factor for the German Economy
IW-Report No. 33 4. July 2025 Barbara Engels / Marc Scheufen / Edgar Schmitz

Artificial Intelligence as a Competitive Factor for the German Economy

Barbara Engels / Marc Scheufen / Edgar Schmitz German Economic Institute (IW) German Economic Institute (IW)

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AI skills demand in the EU
Expertise 8. September 2026 Jan Büchel / Jan Engler / Armin Mertens

AI skills demand in the EU

More and more companies in Europe are using artificial intelligence (AI) technologies. In 2025, one in five companies in the EU with 10 employees or more used at least one major AI technology, up from 8% in 2023 (Eurostat, 2026a).

Jan Büchel / Jan Engler / Armin Mertens IW

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IW-Trends No. 2 15. July 2026 Jan Büchel / Jan Felix Engler / Nicolai Krüger*

AI Specialists in Public Administration – Needs and Options for Action

The use of AI in Germany’s public sector not only offers potential for efficiency gains but, in view of the sector’s shortage of skilled staff, is also urgently needed.

Jan Büchel / Jan Felix Engler / Nicolai Krüger* IW

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