Leading economists have cast doubt on the German government's willingness to implement crucial reforms. "As a realist, I lack the imagination," said DIW President Marcel Fratzscher to "Welt am Sonntag" regarding the implementation of important reforms. The Vice President of the Leibniz Institute for Economic Research Halle (IWH), Oliver Holtemöller, attributes the hesitation to the still robust labor market.
Fratzscher said he personally trusts Chancellor Friedrich Merz (CDU) to achieve major breakthroughs on subsidies, taxes, and pensions. However, he does not see "that the parties are ready to support this. The CDU, CSU, and SPD are the biggest obstacles."
"The pressure is obviously not high enough yet," IWH Vice President Holtemöller told "Welt am Sonntag" with a view to the still stable labor market. Unlike the Agenda era at the beginning of the 2000s, mass unemployment has not been an issue so far.
CDU General Secretary Carsten Linnemann increased pressure on coalition partner SPD to agree to reforms. In "Bild am Sonntag," he proposed a radical turnaround in bureaucracy reduction. "In a first step, all reporting, documentation, and statistical obligations for medium-sized businesses and crafts must expire without replacement on December 31, 2026, unless the state can explicitly prove that they are absolutely necessary," Linnemann said.
The CDU politician personally held SPD leader Lars Klingbeil accountable for the upcoming reforms. Klingbeil gave a "much-praised speech" for structural reforms at the end of March, Linnemann said. "Now he must follow these words with actions. The Union is ready in any case."
The economists expressed particularly clear criticism of pension policy. Fratzscher considers a higher retirement age inevitable: "Retirement at 70 will come," he said. Other countries like Denmark are leading the way. "And examples like Japan show: Working longer doesn't have to make you sick or unhappy, even beyond 67 or 70 years."
Holtemöller also sees changes in the area of old-age provision as mandatory. "Consolidating the federal budget without benefit cuts in pensions as the largest single item is likely to be hardly possible."
Both economists see considerable need for consolidation in the federal budget. Holtemöller advocated for a paradigm shift: away from blanket subsidies for industries, toward targeted support for those in need. Goals could often be achieved more cost-effectively this way. "It's not the theater ticket that should be subsidized, but the theatergoer who otherwise cannot afford admission."
DIW President Fratzscher would also save on subsidies. "Diesel privilege, company car privilege, commuter allowance – these are billions that favor individual groups. This is neither efficient nor fair." Holtemöller advocates for user financing for infrastructure, such as highways. Digital toll systems make this possible today.
According to CSU regional group leader Alexander Hoffmann, the black-red coalition can take more time than until the beginning of the parliamentary summer break for major social and tax reforms if necessary. "We also have a buffer," the CSU politician told Redaktionsnetzwerk Deutschland (RND, Saturday newspapers). The cabinet meets throughout the summer. It is also part of the coalition committee's self-understanding "that we can meet at any time."
A large overall package would be conceivable if the SPD moves on one issue and the Union on another, Hoffmann said. An overall package would also include the Union supporting an increase in the wealth tax "if the SPD also takes a step toward us." The Union needs "changes in labor market policy" for this.
More than a year after the black-red federal government took office, a large portion of the population is experiencing growing concern and dissatisfaction with its policies, according to a current survey. In the representative survey conducted weekly by the Insa polling institute for "Bild am Sonntag," 84 percent of respondents expressed great or very great concern about Germany.
According to the survey, 64 percent of respondents believed that no conceivable coalition is capable of solving the country's problems. Only eleven percent expressed minor concerns.
If the currently planned major reform projects of the federal government on taxes and social issues should fail, 67 percent of respondents wanted Chancellor Friedrich Merz (CDU) to be replaced as chancellor. Even among Union voters, 46 percent would be in favor of a chancellor change in such a situation.
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