Prof. Hawking is concerned about the incompleteness of physics because the laws of physics are described by mathematics which is incomplete by Godel's incompleteness theorem. Godel's proof rests on the ability of creating self-referential statements (This statement is not provable, etc.) And self-referential statements can lead to paradoxes. This brings up the question as to whether the physical world operates by actual principles (that are not just a mathematical description) that constitutes a system which allows self-reference. Some think self-reference is necessary in the physical world in order for consciousness to emerge from nature.
But I've recently read that there are conditions where self-reference in a system does not lead to paradoxes (such as with Godel's incompleteness theorem ?). See for example, in
this paper,
Thomas Bolander, PhD writes on the top of page 14,
"It can be shown that self-reference can only be vicious (lead to paradoxes) if it involves negation or something equivalent."
And I have to think that the ultimate laws of physics (whatever they end up being) do not involve negation since they should describe only what exists and have nothing to say about what does not exist.