Leading economist Marcel Fratzscher has voiced strong criticism regarding the German federal budget, asserting it presents a “calculated deception” that fails to provide meaningful relief for citizens. In remarks to the Mediengruppe Bayern, Fratzscher, president of the German Institute for Economic Research (DIW), questioned the reliance on short-term cuts to fill budgetary gaps rather than addressing underlying issues with comprehensive solutions.
Specific points of contention include the reduction in electricity tax, which benefits businesses but is not extended to household consumers. While improvements to the “mothers’ pension” scheme are planned, broader relief for consumers remains absent. Furthermore, errors were identified within the implementation of the climate subsidy program.
A significant concern highlighted by Fratzscher is the lack of a spending ceiling for the German armed forces within the debt brake reform. He deems this omission a critical error, citing the failure to exclude investments – particularly in infrastructure and education – from the debt brake as detrimental to long-term economic health. The exclusion of defense spending, conversely, is not anticipated to generate substantial growth or additional tax revenue, potentially leading to a significant rise in national debt.
Despite these concerns, Fratzscher shares the views of figures such as Friedrich Merz (CDU), observing signs of a potential economic upturn. He anticipates an economic recovery in the second half of the year and into the following year, projecting a growth rate of 1.7%, compared to a modest 0.3% growth expected for the current year. This positive outlook, however, is contingent upon the government’s successful implementation of its planned investment package.
