Financial expert Clemens Fuest calls for long-term measures to overcome the challenges in Germany

Financial expert Clemens Fuest calls for long-term measures to overcome the challenges in Germany

According to a report by amp2.wiwo.de, Ifo boss Clemens Fuest is calling on the German government to address long-term challenges and not to invest billions in new electricity price subsidies for industry. Fuest emphasizes that the shortage of skilled workers, adaptation to an aging society and rapid digitalization must be solved. He points out that many other industrialized nations have already successfully undergone a structural change towards a larger share of services in economic output. In contrast, Germany has maintained an almost stable industrial share over the last two decades, but there is a risk of de-industrialization due to high electricity prices.

Fuest describes Finance Minister Christian Lindner's planned tax relief for small and medium-sized companies as the right step, but is not enough. Further supply-side reforms are needed, such as family tax reform, better child care, incentives for longer working lives, and reforms in the education system and vocational training to increase labor productivity.

Fuest also recommends a reduction in bureaucracy, faster expansion of the infrastructure and fewer regulations for digital business models.

The Ifo boss rejects the industrial electricity price as proposed by Economics Minister Robert Habeck as this would lead to market distortions. Studies also show that electricity costs in Germany are likely to remain higher than in many other countries despite the expansion of renewable energies. This is because the sun shines longer elsewhere and the wind blows stronger there. By phasing out nuclear power and abandoning shale gas, Germany is also reducing its own energy supply.

Overall, Fuest is calling for a wide range of measures to address long-term challenges and make the German economy sustainable.

It is expected that these demands will have an impact on the market and the financial industry. Adapting to an aging society, for example, opens up new business opportunities in the areas of pension provision and healthcare. Faster digitalization could lead to increased demand for IT services and innovative financial products. Family tax reform and better childcare could also influence consumer spending and demand for certain financial services.

However, the exact impact can only be assessed once concrete measures are implemented and these have an impact on the economy.