Economic crisis in Germany: Fuest urgently demands reforms!

Economic crisis in Germany: Fuest urgently demands reforms!

Heidenheim, Deutschland - Prof. Dr. Clemens Fuest, President of the IFO Institute, recently suffered sharp criticism of the current economic policy of Germany at the IHK annual reception in Heidenheim. He described the situation as a "unprecedented growth weakness", which has been ongoing since the Corona crisis and is due to serious structural errors. According to him, Germany is the bottom of the G7 countries in economic development.

Fuest noticed that the German economy has been stagnating for three years. Investments have decreased significantly and the work volume has declined. This development is also evident in the numbers of gross domestic product (GDP), which according to the Federal Statistical Office has had continuous fluctuations since 1992, but growth forecasts provide for a stagnating trend for the coming years, which could last until the 2030s. Statista informs that the change in real GDP shows both positive and negative developments last year, whereby the figures will be extensive by March 2025 are.

structural challenges of the German economy

A central point in Fuest's speech was the need for long -term agenda that includes targeted investments, faster permits and tax relief from work and innovation. In particular, he emphasizes that Germany has the lowest annual working hours among industrialized countries, which indicates a persistent structural problem.

Demographic aging contributes to the current economic challenge. According to an analysis of Wirtschaftsdienst in particular the retirement of the Baby boomers is a main cause for the decline in the production potential. This is reinforced by low employment rates of older workers and a decline in average working hours. The growth rate of the production potential has decreased drastically since the 1970s - from 3.3 % to 0.4 % in the 2020s.

need for action and reforms

Fuest also warned of Europe's technological deficit compared to the United States, which are leadership in the areas of research expenditure and start -ups. Despite the positive development of over 30 unicorns in Germany, there is a great need for more risk capital and founding centers. The IHK President Markus Maier also expressed concern about the situation and warned that the discussions have to turn less about leisure wishes and more about tangible acts to close the gap between claim and reality.

In order to counter the decline in the employment population and the overall productivity, the economy recommends a coordinated approach that takes into account both social, educational policy and infrastructural aspects. An increase in lifestyle work, a higher profit sharing of women, integration of migrants and corresponding investments in technology -intensive sectors are crucial.

Overall, Germany and Europe face major economic challenges. Fuest and other experts emphasize the need for reforms and specific measures to secure future growth perspectives and to ensure economic stability in the long term.