Following a high-level meeting between Chancellor Friedrich Merz and leading business executives at the Chancellery, Marcel Fratzscher, President of the German Institute for Economic Research (DIW), has cautioned against further industrial subsidies. He warned of potential roadblocks to the ongoing economic transformation if current policies aren’t carefully managed.
Speaking to the “Rheinische Post”, Fratzscher emphasized that the government should prioritize the swift and effective implementation of pledged investments in critical areas like infrastructure, education and innovation. He expressed concern that measures such as reduced electricity taxes specifically for industry and subsidies for company cars could inadvertently hinder necessary structural shifts.
According to Fratzscher, a primary focus should be on streamlining bureaucracy and boosting competitiveness, alongside securing a skilled workforce. He further underscored the need for business leaders to take increased responsibility for their own actions.
“The challenges faced by many industrial sectors, including the automotive industry, are primarily attributable to internal failures and shortcomings, rather than solely inadequate political frameworks” Fratzscher stated. While acknowledging the meeting between the Chancellor and business leaders as a “positive initiative” he tempered expectations, describing it more as a confidence-building measure rather than a guarantee of concrete solutions.
