The German banking sector’s leading voice is issuing a stark warning to Chancellor Scholz’s coalition government, arguing that current economic reforms are inadequate to secure Germany’s long-term competitiveness and growth. Christian Sewing, President of the Bundesverband deutscher Banken and CEO of Deutsche Bank, has publicly urged the “black-red” government to accelerate the pace and scope of structural reforms.
While acknowledging some progress made by the administration, Sewing contends that the measures to date fall short of the ambitious growth targets set at the coalition’s outset – a declared aim of raising the long-term growth trend above 1%. He insists that further, substantial reforms are “indispensable” to achieve this objective. The call comes amidst growing concerns regarding Germany’s waning economic dynamism and its position within a rapidly evolving global landscape.
Sewing’s assessment carries significant weight, representing the view of a vital pillar of the German economy. More worryingly, he predicts that achieving the necessary transformation will require “unpleasant decisions” hinting at potential increases in working hours and a broader acceptance of austerity measures. Drawing a parallel between a national economy and a business, he implies that sacrifices are inevitable to maintain competitiveness, potentially fueling anxieties amongst workers and unions.
The latest growth projections provided by the banking sector suggest a sluggish economic trajectory for 2025, although a modest acceleration is anticipated in the following two years. A growth rate of up to 1.5% is forecast for 2026. Looking at the labour market, a slight easing is predicted, with unemployment expected to dip below three million, a marginal improvement compared to 2025 figures.
However, Sewing’s pronouncements go beyond mere economic forecasts and highlight a growing political pressure on the government. Critics argue that the current reform agenda risks being diluted by political compromises, jeopardizing Germany’s ability to remain a driver of European and global economic growth. The implicit threat – that Germany risks falling behind without bolder action – represents a significant challenge to the government’s policy direction and raises questions about the political will to implement genuinely transformative changes. The question now is whether Scholz’s government will heed the warning and embrace a more assertive reform agenda, or risk presiding over a period of sustained economic stagnation.