Economists Criticize German Government’s Economic Plans, Expect Little Reform
A recent survey of 179 German economists has revealed widespread disappointment with the government’s economic plans, as outlined in the coalition agreement between the CDU and SPD. Only 26% of respondents from the Ifo Institute’s economist panel believe the government is poorly positioned to address economic issues, while 44% remain neutral.
The economists’ lukewarm response is attributed to the perceived lack of bold reforms in the coalition agreement. “The Union and SPD have made great compromises in the coalition agreement, which does not generate euphoria” said Ifo researcher Niklas Potrafke.
While the economists generally support some of the planned reforms, such as a 30% write-off of investment in equipment and the reduction of federal government jobs, they are more divided on other measures. The planned reform of the unemployment benefit, dubbed the “Basic Security for Job Seekers” received a 61% approval rating, while the reduction of corporate tax in 2028 was viewed favorably by 56%.
However, the economists strongly reject certain measures, including the reintroduction of subsidies for agricultural diesel, which was opposed by 89% of respondents and the expansion of the “Mother’s Pension” (three pension points, regardless of the birth year of the children), which was not supported by 84%.
The economists also expressed disappointment with the lack of a comprehensive pension reform, particularly the failure to raise the retirement age. “It would have been urgently necessary to implement a comprehensive pension reform, especially an immediate increase in the retirement age” said Potrafke. “Most politicians know what needs to be done in pension policy, but they lack the courage to implement bold reforms because the German population has not yet internalized the gravity of the demographic challenge.