A leading German economic advisor is urging the federal government to implement substantial spending cuts, potentially reaching up to 80 billion euros annually. Veronika Grimm, a member of the German Council of Economic Experts, stated that significant savings are achievable through comprehensive reforms, asserting that the issue is not a lack of revenue, but rather expenditure management.
Grimm highlighted potential areas for reduction, particularly within the social security system. She suggested limiting the growth of federal contributions to the pension insurance to one percent per year, a move designed to incentivize further reform. Specifically, Grimm proposed reconsidering recent increases to mothers’ pensions, phasing out the option of retirement at age 63 and reevaluating widow’s pension benefits.
Regarding the pension system itself, the economist advocated for the reinstatement of a sustainability factor and linking retirement age to life expectancy. Additionally, she proposed adjusting the increase in existing pensions to reflect inflation, rather than wage growth.
Turning to social welfare programs, Grimm suggested stricter sanctions within the citizen’s allowance scheme, as well as a review of both the waiting period and asset limits. She also proposed a significant reduction in federal financial aid – potentially halved by 2028 – which is currently allocated around 42 billion euros. Tax relief measures, totaling approximately 20 billion euros, could similarly be reduced by half.
Grimm specifically identified climate protection subsidies, stating that savings in the “double-digit billions” could be realized through a more focused approach to these programs. These proposals represent a broad range of options aimed at achieving substantial fiscal consolidation.