Reform uncertainty in the German economy undermines investor confidence
Economic research institutes state that constantly postponed reform packages and uncertain economic policies deepen the economic weakness in Germany.
Quick Look
Kiel and Halle economic institutes emphasize that constantly postponed reform packages and uncertain economic policies in Germany damage investor confidence and trigger economic weakness.
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Why It Matters
In Germany, negotiations are ongoing between the CDU and SPD on a reform package that includes tax, social aid and retirement policies.
Speaking to the AFP agency, Kiel Institute of World Economy (IfW) researcher Stefan Kooths said that steps that are constantly postponed and whose contents are changed damage the trust environment in the markets.
Kooths said, "The fact that reform packages are announced and then postponed every three months makes investors uneasy. People stay waiting because they cannot foresee what they will encounter and what the framework conditions are."
Moreover, the expert emphasized that uncertain economic policies are one of the main reasons for the prolonged weakness in Europe's largest economy.
Oliver Holtemoeller, who works at the Halle Institute for Economic Research (IWH), pointed out that there is a lack of confidence in the future of the German economy.
Holtemoeller said, "This situation is of critical importance in terms of economic decisions. We need an environment where people will believe that things will move on a reasonable course again in this country."
The package was shaped after tough negotiations between the CDU and its government partner, the Social Democratic Party (SPD); It includes tax, social aid and retirement policies.
Open Questions
- When will the final content of the reform package become clear?
- Will concrete steps be taken to increase investor confidence?
