Abstract
The new federal government will face the major challenge of improving the economic situation in Germany with a bold economic policy. It must create an environment that incentivises innovation, raises growth potential, and builds effective state capacities, in order to strengthen citizens’ trust in their democracy. At the same time, it needs answers to the megatrends of decarbonisation, demographics and digitisation in the context of a changing global geopolitics situation. The strength of a social market economy should be utilised to bring about a balance between freedom, competition and social cohesion.