Germany Faces “Acute Danger” to Prosperity, Warns Top Economist
Munich, Germany – Germany’s economic future is at risk due to declining private investment and rising government spending, according to Clemens Fuest, head of the Munich Ifo Institute.In a stark warning, Fuest stated, “Germany has been in economic decline for years. The situation is now dramatic,” signaling a deepening crisis for Europe’s largest economy.
Fuest highlighted a concerning trend: while state expenditure increases, private investment is concurrently falling. “This means that germany’s prosperity is in acute danger,as less private investment means less growth in the medium term,less tax revenue and thus less money for state services,” he cautioned.
The economist’s assessment comes as the average standard of living in Germany has stagnated, with “millions of citizens already experiencing a decline in their standard of living.” Fuest is urging the federal government to develop and implement a comprehensive reform package extending beyond the current coalition agreement. He has set a deadline of spring 2026 for the complete plan.
Key to Fuest’s proposed reforms are changes to social programs and a reduction in bureaucratic burdens on businesses. He specifically called for the elimination of the “mother’s pension,” advocating rather for a freeze on contribution increases.Furthermore, Fuest argues that eliminating documentation requirements related to CO2 emissions, supply chains, and minimum wages – which he claims generate costs without providing benefit - could unlock up to €146 billion in additional economic prosperity annually.
The Ifo institute’s warning underscores growing concerns about Germany’s economic competitiveness and its ability to maintain its high standard of living in the face of global challenges.The call for swift and significant reform signals a critical juncture for the nation’s economic policy.
