Economist Veronika Grimm explains how the economy can get back on track and why standing still is dangerous.

Economist Veronika Grimm explains how the economy can get back on track and why standing still is dangerous.

According to a report by www.t-online.de,

The German economy is stalling and the government has sharply lowered its growth forecast for 2024. The economist Veronika Grimm emphasizes that short-term tax relief can only be an initial impulse and sees the urgent need for a higher retirement age and a reform of the debt brake.

The structural weakness of the German economy's growth is primarily due to demographic change. With significantly more old people retiring and fewer young people joining the labor market, the volume of work will fall and the economy's growth potential will be reduced. This leads to major challenges in terms of climate protection, digital transformation and the maintenance of infrastructure, for which the state is required. At the same time, a declining economy leads to distribution struggles because the state collects less taxes.

The risk of mass unemployment is considered unfounded, but there will be structural change as certain jobs will be eliminated through automation or the use of artificial intelligence. It will be necessary to invest in upskilling and retraining to offer affected workers the chance to seize the new opportunities created by structural change.

According to Finance Minister Christian Lindner, the therapy for the sick economy includes an economic recovery package. Given the factors highlighted by Veronika Grimm, the German government is likely to take measures to address structural growth weakness and promote investment in upskilling and retraining to address structural change.