Germany Faces “Acute Danger” to Prosperity, Warns Top Economist
Munich,โ Germany – Germany’s โeconomic future is at riskโ dueโฃ to โขdeclining private investment and rising government spending, according to Clemens Fuest, head ofโ theโ Munich Ifo Institute.In a stark warning, Fuest stated, “Germany has been inโ economic decline for years. The situation โขis โnow dramatic,” signaling a deepening crisis for Europe’s largest economy.
Fuest highlighted โคa concerning trend: whileโ state expenditure increases, privateโ investment is concurrently falling. “This means that โขgermany’s prosperity is inโข acute danger,as less private investment means less growth in the medium term,less tax revenue and โthus โless money forโค state services,” he โคcautioned.
The economist’s assessment comes as the average standardโ of living inโ Germany โhas stagnated, withโค “millions of citizens already experiencing aโฃ decline in their standard of living.”โฃ Fuest is urging the federalโข government to develop and implement a comprehensive reform package โextending beyond the current coalition agreement. Heโ has set a deadline of spring 2026 for the complete plan.
Key to โคFuest’s โproposed reforms are changes to social programs and aโ reduction in bureaucratic burdens on businesses. He specifically called forโฃ the elimination of theโข “mother’s pension,” advocating rather for a freeze on contribution increases.Furthermore, Fuest argues that eliminating documentation requirements โrelated toโ CO2 โขemissions, supply chains, and minimum wages – which he claims generate costs without providing benefit โข-โ couldโ unlock upโ to โฌ146 billion in additional โฃeconomic โprosperity 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 faceโ of global challenges.The call for swift and significant reform signals a critical junctureโ for the nation’s economic policy.