Economists Criticize Federal Government Sharply - Germany’s economic experts demand urgent reforms to revive stagnant growth
The German Council of Economic Experts has released its annual report, sounding a stark warning about the country's economic landscape. It criticises the government's handling of funds and urges action on various fronts.
The council lambasts the €500 billion Special Fund for Climate and Transformation (SVIK), stating it has yielded minimal macroeconomic benefits. Instead of driving new investments, funds are being shuffled around, with planned core budget investments rerouted into the special fund. This mismanagement hinders growth, as the debt package could have been a powerful growth tool if funds were additional and effectively deployed.
The experts propose a range of solutions. They recommend dismantling trade barriers and establishing a unified European capital market to boost the economy. Strengthening collective defense capabilities in Europe is also suggested. To treat equity and debt financing equally, the council recommends introducing an Allowance for Corporate Equity (ACE). Additionally, they advocate for lowering corporate taxes and simplifying the tax system to reduce the tax burden and stimulate investment dynamics.
The council also highlights persistent failures in addressing economic issues, particularly demographic challenges. Pensions, healthcare, and education have been woefully neglected under the current government.
The German Council of Economic Experts' report underscores the need for Germany to step up its game. It calls for better management of funds, targeted measures to strengthen wealth accumulation, and action on demographic challenges. The council's proposals aim to stimulate growth, foster investment, and address long-standing economic issues.
