The new German government wants to revive the German economy by introducing an urgent recovery program. However, the crisis is so severe that economic experts see little chance of a rapid upturn.
The German Council of Economic Experts’ spring report -which the linked article refers to- is far less negative than the article suggests, at least in my interpretation. Among others, it recommends a range of measures for the government to promote investments, reduce public bureaucracy, and other developments.
For example, the linked article discusses Germany’s fiscal package by (truthfully) saying that it would increase the country’s debt, but the experts’ report also reads that the newly created special fund “aims to strengthen military defence capabilities, modernise public infrastructure, support decarbonisation and stimulate the German economy.” It is important to mention at this point that government spending has not yet been taken into account in the ~1% GDP growth forecast for 2026 (which is what the article seems to ignore), so the GDP growth next year will be higher (all other tings being equal).
The experts themsleves recommend to raise the threshold for defence expenditure in the federal budget to at least 2 % of GDP, and suggest to further increase public spending for public transport and education - things that, if done right, will be good for the society and economy in the long run. The German government has not yet announced how the new funds will exactly be used for, and without these numbers it is even harder to tell the future even in the short run.
This is not to say that it is all good and we are going to celebrate, but the doomsday approach is the wrong one I would say, at least when you read the entire report. But that’s just my view, maybe I am wrong.
The German Council of Economic Experts’ spring report -which the linked article refers to- is far less negative than the article suggests, at least in my interpretation. Among others, it recommends a range of measures for the government to promote investments, reduce public bureaucracy, and other developments.
For example, the linked article discusses Germany’s fiscal package by (truthfully) saying that it would increase the country’s debt, but the experts’ report also reads that the newly created special fund “aims to strengthen military defence capabilities, modernise public infrastructure, support decarbonisation and stimulate the German economy.” It is important to mention at this point that government spending has not yet been taken into account in the ~1% GDP growth forecast for 2026 (which is what the article seems to ignore), so the GDP growth next year will be higher (all other tings being equal).
The experts themsleves recommend to raise the threshold for defence expenditure in the federal budget to at least 2 % of GDP, and suggest to further increase public spending for public transport and education - things that, if done right, will be good for the society and economy in the long run. The German government has not yet announced how the new funds will exactly be used for, and without these numbers it is even harder to tell the future even in the short run.
This is not to say that it is all good and we are going to celebrate, but the doomsday approach is the wrong one I would say, at least when you read the entire report. But that’s just my view, maybe I am wrong.
[Made an edit to insert the link.]
If you know German, here is an article about reducing bureaucracy by the public prosecutor of the CumEx fraud.
https://feddit.org/post/13098300