Economic researchers criticize government for unclear economic policy

In the short term, the German economy will grow stronger again. But the political back and forth over planned reforms is slowing down spending and investments, scientists warn.

Economists with their autumn report: More growth, but criticism of the government. Photo: Sebastian Gollnow/dpa

Dusseldorf. Germany's leading economic researchers criticize the federal government's "unclear economic policy" and call for a clearer reform course. Although the short-term growth prospects are significantly better than just a few months ago, long-term problems remain unresolved, said representatives of the five leading institutes on Thursday when presenting their autumn report.

Stefan Kooths, head of the forecasting center at the Kiel Institute for Economic Research, criticized the fact that reform packages were announced and changed every month. This unsettles investors and the population and leads to reluctance to spend and invest. “We need a climate in which people have confidence again that things are moving forward sensibly in this country again,” said Oliver Holtemöller from the IWH.

He went on to say that economic researchers do not see themselves in a position to recommend or reject individual political ideas such as the end of the “retirement at 63” option. What is clear, however, is that pension spending puts a strain on the federal budget and, in the long term, means that higher debts also drive up interest costs and put a strain on the financial stability of the federal finances.

The “need for consolidation” is currently only being postponed into the future, so that more and more savings will have to be made in the coming years. “Investors also see that,” said Kiel economist Kooths.

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