Germany: Experts express disappointment with Merz government’s slow reforms
German economists have expressed disappointment with the slow pace of reforms undertaken by Chancellor Friedrich Merz’s government, warning that the lack of structural reforms, particularly those related to curbing pension costs, could exacerbate long-term economic problems, even though the government’s massive spending program may provide a temporary boost to growth.
Germany, with its sluggish economy, faces the prospect of contracting for the third consecutive year, making reviving growth one of the Merz government’s most pressing challenges.
According to a survey conducted by the Ifo Economic Institute of 170 university professors, 42% of respondents gave a negative assessment of the government’s economic policies during its first 100 days in office, while only a quarter viewed them positively.
Niklas Potrafke, a researcher at the institute, emphasized that pension reform is urgent, but the steps taken by the government are going in exactly the wrong direction.
Experts have particularly criticized the expansion of the so-called “mother’s pension,” an additional benefit given to parents—and often mothers—for the years they raise children, as well as the failure to raise the retirement age or the retirement age.
On the other hand, some policies were welcomed, most notably the boost to public investment through a special €500 billion infrastructure fund, the implementation of the so-called investment incentive that gives companies greater tax depreciation benefits, as well as increased defense spending and an anticipated cut in corporate tax.
In the short term, half of survey participants expected a positive impact from government measures, while only 12% expected negative effects.
Regarding the medium-term outlook, 34% expressed a positive outlook, while 26% viewed the outlook as negative.
Potrafke concluded by emphasizing that market-oriented structural reforms are necessary to achieve sustainable economic growth, but there are currently no indications that such reforms will be adopted.
