Following a meeting between Chancellor Friedrich Merz and leading business executives at the Chancellery, Marcel Fratzscher, President of the German Institute for Economic Research (DIW), has cautioned against further government subsidies for industry. He stressed the potential for such measures to impede necessary structural transformations.
Speaking to the “Rheinische Post” Fratzscher advised the government to prioritize the swift and effective implementation of promised investments in infrastructure, education and innovation, rather than committing to additional financial support. He specifically noted that targeted tax reductions for industry, alongside policies like subsidies for company cars, carry the risk of obstructing vital shifts within the economy.
Fratzscher emphasized that reducing bureaucratic hurdles and bolstering competition should be paramount, alongside securing a skilled workforce. He underscored the need for business leaders to assume greater responsibility for their actions.
“The challenges facing many industries, such as the automotive sector, are primarily attributable to internal shortcomings and failures, rather than solely inadequate political frameworks” Fratzscher stated. While describing the Chancellor’s summit with business heads as “a positive initiative” he tempered expectations, asserting that it functions more as a confidence-building measure than a guarantee of definitive solutions.