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Germany's economic future: reforms urgently needed!
On October 2nd, 2025, Monika Schnitzer will discuss Germany's economic challenges and need for reform in a UBS Center Lecture.
Germany's economic future: reforms urgently needed!
In Germany's current economic situation, the focus is on an issue that is of central importance to many citizens: the reform of the debt budget. The UBS Center Opinion Lecture, held by Monika Schnitzer, professor at LMU Munich and member of the CEPR, examined the importance of reforms for the future of the German economy. Schnitzer called for a critical examination of the current state of the economy and emphasized: “You heard the shot, but then you stopped halfway.” reports CEPR.
The event took place on October 2, 2025 and was open to the public but organized on a first-come, first-served basis. Those interested could also watch a live stream of the event. In her lecture, Schnitzer discussed, among other things, the stagnation of the economy, which is made even more difficult by a restrictive debt brake. This not only slows down necessary investments in infrastructure and innovation, but also leads to declining confidence in Germany's political future security.
The challenges of the German state budget
Germany faces the challenge of preserving its economic substance and actively shaping structural change. The question is how the priorities should be set between defense, digitalization, education and social security systems. A central point is the effects of the debt brake, which has been anchored in the Basic Law since 2009 and aims to limit new debt and protect future generations. How bpb emphasizes, the debt brake allows new debt of up to 0.35% of GDP annually, but also has an exception for economic crises.
The problem is exacerbated by the fact that many criticize that the debt brake is hindering urgently needed investments in infrastructure. If the government cannot cover revenues - mainly from payroll taxes and sales taxes - through spending, this leads to unwanted borrowing, which limits future economic flexibility.
Where is the journey going?
In view of demographic change and increasing pressure in many areas, it is essential to reset the priorities. The question of the role of reducing bureaucracy and the long-term effects on Europe and Switzerland remains one of the most pressing challenges. It takes a good hand in designing policies that not only offer short-term solutions, but also formulate future-oriented strategies for future generations.
In summary, it can be said that reforms in the area of economic policy are urgently needed in order to set the course for positive development. Schnitzer's analysis and the upcoming discussions show: There is great potential in realigning the political agenda in order to secure Germany's economic position in the long term.