2024-02-22 01:23:00
The optimism is over: the federal government has to significantly reduce its forecast for the current financial year. This brings Scholz in particular criticism.
The federal government has significantly lowered its growth forecast for 2024. According to the annual economic report approved by the cabinet on Wednesday, gross domestic product (GDP) is expected to grow by 0.2 percent, said government spokesman Steffen Hebestreit in Berlin. In October, the federal government was still expecting growth of 1.3 percent this year.
Economics Minister Robert Habeck (Greens) therefore wants to move the economy forward with a “reform booster”. “It’s about nothing less than defending the competitiveness of the German industrial location,” explained Habeck on Wednesday in Berlin. The focus is particularly on curbing the labor shortage, reducing bureaucracy and improving the framework conditions for investments.
Habeck had already announced the key data last week. He called the economic outlook “dramatically bad.” Finance Minister Christian Lindner (FDP) called it “embarrassing and socially dangerous.” Both ministers want to strengthen the competitiveness of the economy, but their proposals for this are different.
International crises put a strain on the economy
As Hebestreit said on Wednesday, the government expects consumer price inflation to decline. Inflation should therefore fall to 2.8 percent. In 2023, the inflation rate was 5.9 percent.
The government is also expecting real wages to rise this year, which could lead to growing domestic consumption, Hebestreit said. Nevertheless, the German economy is in difficult waters, he added, pointing to the crises in the Middle East and Ukraine.
Klöckner: Scholz is in “a completely different film”
In view of the poor economic prospects, the Union has called on the federal government to implement an “economic and growth turnaround”. “We now need, to use the Chancellor’s language, a triple boost for the economy or a multiple boost for the economy,” said the economic policy spokeswoman for the CDU/CSU parliamentary group, Julia Klöckner (CDU), to the German press. Agency.
Klöckner accused Scholz of misunderstanding the seriousness of the situation. “If the chancellor in a government coalition is in a completely different film than the responsible ministers, then I get worried. Why? Because it is clear that the right decisions will probably not be made or will only be made in a homeopathic way.” The Union has proposed a package of measures with 12 points that could be implemented immediately. This includes points such as limiting social security contributions to 40 percent of gross wages, reducing energy prices and stopping the supply chain law.
Economists see politics as having a duty
In view of the threat of a recession, leading German economists are calling for more political efforts to sustainably stimulate the economy. Ifo boss Clemens Fuest pointed out on Monday at a video conference of leading German economic researchers that consumers were unsettled and companies’ business was going “extremely badly” at the beginning of the year. The conditions for investments are unfavorable, also because of the bureaucratic burden. Here you can read more about it.
The President of the Berlin DIW, Marcel Fratzscher, also emphasized that politicians have a duty to create better conditions. More public investment in efficient transport, digital and educational infrastructure is urgently needed.
According to the President of the Halle Institute for Economic Research, Reint Gropp, the lack of desire to consume and the lack of investment are to some extent self-inflicted. This has a lot to do with communication. The federal government is extremely poor at conveying a coherent strategy in the fight against climate change, demographic problems and to ward off geostrategic risks: “This lack of communication of a strategy leads to this uncertainty among both households and companies.” The government is pursuing a “micro-dirigistic approach,” but it is not working well.