Government's efforts are receiving momentum, yet require enhancement
In a recent statement, Ifo President Clemens Fuest has expressed criticism towards several decisions made by the new German federal government.
Fuest believes that the federal government's decisions do not limit spending nor strengthen growth forces. He criticised the permanent reduction of Value Added Tax (VAT) for the catering industry as a financial mistake, and the introduction of the early retirement pension, stating it brings bureaucracy and distributes transfers to many young people who do not need them.
However, Fuest also praised the new government's efforts in promoting innovation. The Hightech-Agenda, coordinated by the Ministry led by Dorothee Bär, has been commended by Fuest for its strategic investment and framework improvements. With a 2025 budget of 22.38 billion euros dedicated to future technologies such as Artificial Intelligence, fusion research, and space travel, this agenda involves actors from science, industry, and society developing concrete roadmaps.
Fuest emphasized that the federal government has only been in office for about two months, allowing them to correct their course in the coming months. He summarized that the economic policy record of the new federal government shows both positive and negative aspects.
It remains to be seen how the federal government will respond to Fuest's criticisms and whether they will make adjustments to their economic policies moving forward.
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