A leading economist at the Leibniz Institute for Economic Research, Reint E. Gropp, is urging future government parties to implement comprehensive reforms.
According to an interview with the ntv television station, Gropp hopes for a bold approach to the reform backlog, which has accumulated since the end of the ‘grand coalition’. He is expecting, among other things, a reduction in bureaucracy and fundamental changes to the pension system. “We are not talking about just slightly adjusting the pension formula, but about fundamental, systemic changes” he said.
Gropp views a likely coalition between the Union and the SPD with skepticism when it comes to pension reforms. “We have long known that the current pensions in their current form are not financially sustainable” he said. “Either we must set up more personal responsibility or, if we want to maintain the current pensions, we would have to raise the pension contributions to an unbelievable extent.”
The economist envisions a capital-funded pension system, where individual pensions are backed by private investments.
Gropp, however, expects a swift compromise on a special fund for the German military and a reform of the income tax.
He is concerned about the protectionist course of the US president, as Germany is particularly dependent on exports to the US. “If the US president really does introduce tariffs, the EU will have to respond with its own tariffs” he said. “That not only makes things more expensive, but is also a very bad economic policy.”
As a result, the economist is pessimistic about the country’s economic growth in the coming years and expects only slight gains. However, he believes that if the government is brave and implements reforms, it will be better off in the next ten years.