“Germany's economic situation is dramatic.” An economist doesn't beat around the bush

If serious reforms are not introduced, the German economy will face further declines, warned the head of the Institute for Economic Research (IFO), Clemens Fuest. He considered the current economic situation in Germany to be dramatic.

– For years Germany is in economic decline. Currently, the situation is dramatic, Fuest said in an interview with the Bild newspaper, noting that millions of Germans are already experiencing a deterioration of their financial situation.

While government spending continues to rise, private investment is falling, the IFO chief noted. In his opinion, this means “in the medium term, lower economic growth, lower tax revenues, and ultimately less funds for public services.”

The economist called for broad reforms focused on reducing bureaucracy. He pointed to requirements on carbon emissions, supply chains and minimum wages as examples of costly regulations.

According to Fuest, simplifying regulations could bring up to EUR 146 billion in additional funds to the German economy.

The head of the IFO appealed to the government in Berlin to present a comprehensive reform program that goes beyond the current coalition arrangements. In his opinion, such a plan should be presented no later than spring 2026.

Overcoming the recession that has been ongoing in the country for two years is considered a priority for the coalition of the Christian Democrats and the Social Democrats. Germany complains about rising energy prices, falling demand, and new American tariffs.

Chancellor Friedrich Merz announced an “autumn of reforms”. Germany must prepare for profound changes that will also affect the welfare state.

Merz's government is also increasing spending on infrastructure and the military. The Christian Democrat leader intended this to be a development impulse for the stagnant economy. (PAP)

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