The German government’s Council of Economic Experts expects the economy to contract by 0.4 per cent, Junge Welt reports.
Analysts are also predicting a decline in German economic output this year. As the committee announced at the presentation of its annual report on Wednesday, the scientists expect gross domestic product to fall by 0.4 per cent. Economic growth of 0.7 per cent is expected again next year. After hitting 6.1 per cent in 2022, overall inflation might reach 2.6 per cent in 2024. The committee believes private consumer spending will recover by the end of next year.
The Expert Council considers the ageing society and lack of skilled labour as obstacles to economic development. In addition, the lack of investment and modernisation of enterprises may hinder positive economic development in the medium and long term. Asked about the “debt brake” at a press conference, Council member Martin Werding admitted that “this has not been thought about.” After all, it requires a majority in parliament to amend the constitution. Therefore, for the “economic experts” this is not a sensible option for reform.
Instead, they recommend raising labour productivity, ensuring skilled labour migration, increasing working life expectancy and “improving the liquidity of capital markets, strengthening the equity culture and increasing venture capital”. Reform of the basic income support system should pool benefits, “strengthen incentives to work” and ensure a “lower transfer withdrawal rate”, i.e. more additional earnings in receipt of benefits. Improving the childcare system would create more “employment opportunities”, the report said. Regarding compulsory pension insurance, the Council said “a combination of different reform options (…) is needed”, but the “core element” is to link the retirement age “to life expectancy at retirement” combined with an “additional funded pension system”.
