Bundesbank President Joachim Nagel has urged the public to adopt a longer working life, citing the challenging economic climate and pressing demographic changes. He stated that Germany needs to address the consequences of demographic shifts, which requires tackling difficult topics such as gradually adjusting the statutory retirement age in line with increasing life expectancy.
While acknowledged difficulty and new tariff threats from the United States, Nagel does not currently foresee economic stagnation in Germany. However, he stressed that significant effort is required to drive growth. He highlighted a clear concerning trend: Germany’s productivity growth has declined significantly relative to international competitors, slowing by more than half. He cautioned that the country is losing industrial jobs and market share in international competition, putting considerable pressure on the social security systems.
Furthermore, the President reaffirmed his belief that the debt brake mechanism requires reform. According to Nagel, the current structure is no longer sufficient to guarantee sound public finances or adhere to EU fiscal rules. He argued that a stability-focused reform of the debt brake would eventually guide new borrowing back into the intended financial framework. Such a reform would also facilitate the gradual reinstitution of defense spending without requiring new debt, and it would be crucial for Germany to maintaining its prestigious AAA rating, which he noted is certainly not guaranteed automatically.