Chairman of the Board of Managing Directors (CEO), Landesbank Baden-Württemberg (LBBW)
Folge 28: Wie Deutschland wieder erfolgreich sein kann - mit Rainer Neske
Deutschland hat gewählt. Was muss eine neue Bundesregierung tun, damit Deutschland wirtschafts- und finanzpolitisch aus der ...
About Rainer Neske
In a February 2025 podcast, Rainer Neske stated that Germany has entered a "new reality" following the postwar period, citing the changing role of the United States in Europe and the decline of the German export model. He argued that a new federal government should allow entrepreneurs to operate without excessive regulation, permit companies to manage adjustments such as job cuts and production relocations at the operational level, and invest in infrastructure. Neske also called for a long-term European defense strategy to provide planning certainty for industry, rather than "hectic" policy shifts. Neske expressed confidence in Germany's remaining strengths, including a reliable legal system, industrial clusters in fields such as healthcare and artificial intelligence, and a highly educated workforce. He said that combining these assets with economic "common sense" would position the country well in global competition.
Transcript (8 segments)
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Rainer Neske24:13
First, we should not burden companies with a lead vest. Second, we must allow companies to adjust, even if painful. Third, we need to leverage our location advantages. Germany still has a reliable legal system and strong clusters in Baden-Württemberg. We have highly educated and motivated employees. If we let entrepreneurs be entrepreneurs, work on location and infrastructure, I believe we will be well positioned globally. We look at Chinese EVs and US dynamism, but the US has deep divisions and tariff problems, and China has demographic issues. So we have no reason to see this as unwinnable. With these three points, we have a good chance to be better off in 2025, 2026, 2027.
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Host26:38
That was a clear plea for what needs to be done. There are many details and complexities. On bureaucracy, we are all quickly in agreement abstractly. In Baden-Württemberg, we started an 'Entlastungsallianz'. Only 6-8% of rules are state-made; most come from the federal level or increasingly from the EU. There is now talk of scaling back overregulation. Between complete paralysis and a chainsaw, there must be a sensible middle ground. Do you have confidence that things are moving in the right direction?
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Rainer Neske28:09
I have been involved in these discussions and it shows that getting started early pays off. We need a new self-confidence in Europe. Germany is the largest net payer; if German industry loses competitiveness, Europe suffers. We must actively shape Europe. On bureaucracy, we need efficiency. We saw with the LNG terminals that when pressure is high, things can move fast. We missed the window to apply that to other areas like grid expansion. We need more courage from politics.
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Host31:15
You said there is reason for optimism. Baden-Württemberg invests over 5.5% of GDP in R&D, a third of the state budget goes to education and research. We have 70 universities and clusters. But to make this work, we need funding. I want to dig deeper on the debt brake. I am a supporter, but we see changes. Defense spending may require a special fund. How do you see it? Is the Swabian housewife the right model, or should we take on debt for long-term investments like the Swabian entrepreneur?
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Rainer Neske33:07
It makes sense to take on debt for investments that yield long-term returns. But there must be limits because democratic processes tend to use debt consumptively. Look at the US and some European countries near their financing limits. Second, before debt, we should reallocate and prioritize. There is still too little reallocation. Third, efficiency: taking on debt is pointless if we cannot use the funds efficiently. If we can't build a train station in under 40 years, costs multiply. If we improve efficiency, we save money. Only after addressing these three should we talk about modifying the debt brake. We must not burden future generations with debt; they already face unfunded pensions. A company would do the same.
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Host40:00
Thank you for that clear and differentiated statement. We are not far apart. Infrastructure investments benefit future generations, but politics often prefers short-term consumption. We must become more efficient, digital, and agile. In the tax administration, we will lose 30% of staff in 10 years, so automation is necessary. An important point: we may need to ask the current generation for some sacrifice, like a defense solidarity surcharge. Finally, on climate: this topic has been overshadowed. The US is turning away from climate action. How do you see it? Is the topic still current? Should the financial market contribute? Or is the fossil age being prolonged?
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Rainer Neske43:32
This is a concerning development. We saw US asset managers demanding climate neutrality and then the opposite becoming dominant. With many current problems, long-term issues risk being overlooked. Europe must maintain a balanced approach, avoid excessive reporting, and focus on CO2 prices. We need to find a middle course, as we did with defense in ESG. Economic growth is a prerequisite for solving climate problems. I am worried, but I believe a middle path is the way. We need to invest in grid transformation and base-load power supply. The LA fires were a warning, but we should not over-regulate minor things.
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Host46:28
It's important to keep course and not be swayed, but with balance and economic reason. We have updated our pension assets to be Paris-aligned. Thank you, Rainer Neske, for this tour around the globe and back to the SMEs in Baden-Württemberg. We have big tasks ahead, but also justified optimism. We need to roll up our sleeves. Thank you for the conversation. This was Cashflow, the podcast of the Baden-Württemberg Ministry of Finance.