A prominent economist has delivered a mixed assessment of the German government’s economic and financial policies, particularly regarding Chancellor Friedrich Merz’s leadership. Clemens Fuest, President of the Ifo Institute, voiced concerns in a recent commentary for the Handelsblatt newspaper.
Fuest emphasized that several government initiatives have failed to effectively control spending or bolster economic growth. He specifically cited expansions of parental benefits and the introduction of a subsidized early retirement scheme as problematic. Regarding the early retirement program, Fuest criticized its bureaucratic complexity and the broad distribution of benefits to young individuals who may not require the assistance, labeling it a “scattergun approach.
Looking ahead, Fuest is urging policymakers to undertake comprehensive reforms of both the pension system and the healthcare sector. He argues that measures are vital to curb expenditure growth, ensuring it doesn’t outpace wage increases. Furthermore, he strongly recommended efforts to encourage continued workforce participation beyond the age of 63, noting this would bolster pension system revenues while reducing overall payout obligations.
The economist advocates for a future trajectory where pension increases remain below the rate of wage growth, a principle he believes should extend to the pensions of public servants as well. These proposals come as Chancellor Merz prepares for a traditional summer press conference in Berlin.