The German economy is facing a perfect storm, according to Michael Hüther, the head of the Cologne Institute of the German Economy (IW). “We are experiencing the perfect storm on the German national economy: the number of working-age individuals is shrinking due to demographic reasons, globalization is hitting us particularly hard and we are having difficulties in organizing a good transition to climate neutrality” he told the ‘Stern’ magazine.
He called for a clear course in the energy transition: “For the path to climate neutrality, we need an effective strategy that is not constantly being undermined.” The economist criticized, among other things, the doubts expressed by Friedrich Merz about the green steel that German steel producers want to produce, as well as Merz’s disapproval of wind turbines.
Hüther questioned whether the democratic parties have the right answers to the current problems: “I am also not sure if the Union is really well-prepared conceptually to face the challenges.” He suggested possible coalitions, saying, “Black-Green with the Social Democrats Boris Pistorius, Jörg Kukies and Lars Klingbeil – I can imagine something good there.”
Regarding the economic program of the AfD, which demands leaving the EU, the economist said, “That is all extremely dangerous and would harm the German economy. Without the EU, we would do worse, as one can see from Great Britain.”
On the debt brake, Hüther said, “A new government will have to review the debt brake in the light of the investment needs in infrastructure and networks. We won’t get it done this way.”
To the threat of US President Donald Trump to impose tariffs on Europe, the IW head responded, “I always wonder why no one explains to Trump why free trade is so beneficial.” He also said that Trump’s criticism of Europe is not new, stating, “Trump is telling the same old lies that he was telling eight years ago.” The economist emphasized the importance of European self-awareness, saying, “With 450 million people, the EU has the largest internal market, which is not uninteresting for the Americans.