Black-red: After 100 days, economic policy is on the brink!

Black-red: After 100 days, economic policy is on the brink!

Today, after 100 days in office, the black-red federal government presented a mixed economic policy balance sheet. According to a survey by the Ifo Institute, 41% of the 170 economics professors surveyed see no significant change in course compared to the previous traffic light government. Before the election, Friedrich Merz had promised a comprehensive change in economic policy, but reality seems to be lagging well behind this expectation.

The economists surveyed were particularly disappointed in tax and social policy, where no significant changes were identified. Only 25% of economists are satisfied with the economic measures implemented so far. A large proportion attest that the new government has medium (53%) or even low (31%) economic competence. “The lack of reform efforts in the social systems as well as a lack of impetus for structural reforms, such as reducing bureaucracy and climate protection, contribute to the negative mood,” explains Prof. Niklas Potrafke from the Ifo Center for Public Finance and Political Economy.

Positive aspects of government work

Nevertheless, there are also some positive assessments. Economists view the strengthening of public investments through special funds as progress. In addition, the “investment booster”, which offers improved depreciation options for companies, is seen as a step in the right direction. The additional spending on defense and first steps in tax policy, such as the reduction in corporate tax, were also positively highlighted by some respondents.

However, when asked about successful decisions, 29 participants were unable to give a significant answer. Under “Other” the changed appearance of Germany on the world political and European stage was important. The abolition of the German supply chain law and the gas price levy were also discussed.

Criticism of political decisions

However, the critical voices clearly predominate. The expansion of the “mother’s pension” was most often described as a failure. In addition, the extensive reform of the debt brake and the creation of the special fund for infrastructure are critically assessed. The passed pension package also met with rejection, while the lack of willingness to reform social spending was also highlighted. There are also concerns about the electricity tax cut, which critics say will only benefit the manufacturing sector, as well as accusations that the government is relying too heavily on fossil fuels such as gas.

Additional critical points arise in the election of the constitutional judge and with regard to the planned budget. The planned reduction in sales tax in the catering industry and the desired tariff compliance law are also criticized.

The first balance sheet of the black-red government paints a picture that shows numerous challenges and construction sites. In order to meet the expectations placed on them, there is a clear need for action in the economic policy agenda. The underlying dissatisfaction among economists could have a long-term impact on the acceptance of government decisions if no noticeable reforms follow.

This illustrates how important it is for the new federal government not only to take short-term fiscal policy measures, but also to initiate sustainable structural reforms in order to strengthen confidence in the country's economic policy competence.

For further details on the initial situation and opinions from the economy, you can Pioneer as well as that Ifo Visit institute.