A leading German economic advisor is urging the federal government to implement substantial spending cuts, potentially reaching up to 80 billion euros annually. Veronika Grimm, a member of the German Council of Economic Experts, stated that significant savings are achievable through comprehensive reform rather than addressing revenue shortfalls.
Grimm highlighted the potential for reductions within the social security system, specifically suggesting a limit on the annual increase in federal contributions to the pension insurance to one percent. She proposed reconsidering recent increases to mothers’ pensions, phasing out the option for retirement at age 63 and adjusting survivor benefits.
Further pension reform options presented by Grimm include reintroducing the sustainability factor – a mechanism linking pension levels to demographic shifts – and formally tying the retirement age to increasing life expectancy. She also suggested linking increases in existing pension payments to inflation rates rather than wage growth.
Regarding social welfare, Grimm advocated for stricter sanctions within the basic income system (“Bürgergeld”), along with a review of the grace period and asset limits. Additionally, she proposed a reduction by half of federal financial aid, currently projected at nearly 42 billion euros by 2028 and a halving of approximately 20 billion euros in tax breaks. A significant portion of these savings, she indicated, could be realized through a review of climate protection subsidies.
The economist emphasized that these measures represent potential pathways to fiscal consolidation and structural improvements within the federal budget.
