The President of the Bundesbank, Joachim Nagel, has issued a stark critique of the European Union and Eurozone’s sluggish pace of reform, warning that inertia risks undermining Germany’s economic competitiveness and long-term stability. In an interview with “Stern” magazine, Nagel expressed profound disappointment with the lack of tangible progress following the Draghi report, intended to boost the EU’s economic dynamism. He lamented that while problems are recognized at a strategic level, they remain largely trapped within the morass of political processes.
Nagel specifically targeted the stalled progress on the proposed European banking and capital markets union as “tragic” highlighting a systemic failure to translate policy objectives into concrete action. He accused the EU of having lingered too long under the assumption that complex decisions could be deferred indefinitely, a luxury he insists is no longer sustainable. He demanded clearer political directives and legally binding timelines to ensure future reform initiatives maintain momentum.
Turning his attention to the German government, Nagel challenged Berlin to develop a comprehensive reform agenda, arguing that the nation’s analytical capabilities are overshadowed by a chronic deficiency in implementation. While acknowledging recent breakthroughs in the protracted coalition dispute over pension reform, he emphasized the critical need to capitalize on this renewed energy and avoid further delays.
Nagel forcefully advocated linking the statutory retirement age to life expectancy from 2031 onward. He projected a potential gradual rise in the retirement age to approximately 69 years by 2070, citing the ongoing rise in life expectancy and the looming demographic challenge of millions of workers retiring in the coming years. “We will have to work more to mitigate this” he stated bluntly.
Beyond pensions, Nagel called for a fundamental re-evaluation of private retirement provisions, urging a fresh start for the governing parties, the CDU/CSU and SPD, to rectify past shortcomings. He highlighted existing proposals gathering dust and emphasized the urgency of swift decision-making across a broad spectrum of policy areas, including public administration, energy supply, healthcare and long-term care. His overarching message underscored the necessity of easing the burden on businesses and taxpayers while simultaneously reinvigorating economic growth within Germany and across the Eurozone. Failing to do so, he warned, risks condemning Europe to economic irrelevance.
