The head of the Ifo Institute in Munich, Clemens Fuest, is urging the German government to deploy the vast sums of public debt accumulated through special funds in a fiscally responsible manner.
Speaking to the Süddeutsche Zeitung, Fuest emphasized that investments financed by debt can benefit future generations provided they yield returns exceeding interest payments. He suggested channeling resources into areas such as education and crucial transportation infrastructure like rail and roadways, highlighting the potential for these investments to generate long-term economic benefits.
However, Fuest cautioned against poorly executed public spending, referencing examples of underutilized regional airports as a cautionary tale. He stressed the importance of ensuring investments are productive and avoid losses.
Acknowledging growing concerns about government debt, Fuest stated that younger generations are justified in voicing their opposition to excessive borrowing. He further warned that Germany’s rapidly shrinking workforce poses a significant challenge to the country’s ability to service its debt in the future.