Federal Government's previous economic actions receive largely negative evaluations from economic experts - Federal economists tend to give unfavorable assessments of the Federal Government's performance so far
In a recent survey conducted by the Ifo Institute and the "Frankfurter Allgemeine Zeitung" between July 29 and August 5, economists have emphasised the need for market-oriented structural reforms to achieve sustainable economic growth in Germany.
The survey reveals that most experts expect positive effects from the measures taken so far, both in the short and medium term. Notably, the survey did not mention any specific negative effects from the measures implemented thus far.
The proposed reforms focus on enhancing competition, fostering industrial upgrading, improving infrastructure, and streamlining regulations. These reforms aim to enable efficient resource allocation through markets while the government actively facilitates necessary economic transformations and infrastructure development.
Key market-oriented structural reforms include enhancing competition and reducing anti-competitive practices, industrial upgrading linked to changing factor endowments, improving infrastructure that supports economic activity, streamlining regulatory and fiscal institutions, adopting targeted policies that balance short-term social concerns with long-term productivity gains, and recognising economic development as a dynamic continuum requiring adaptive reforms at each stage.
Economists have expressed critical views towards the expansion of the mother's pension and the lack of an increase in the retirement and pension entry age, which is also a point of criticism among experts. On the other hand, the investment booster, including improved depreciation options for companies, higher defense spending, and the announced reduction in corporate tax, is favoured by many economists.
The survey involved 170 economics professors, and Ifo researcher Niklas Potrafke stated that some participants criticise the reform of the debt brake. However, Potrafke also indicated that currently, there is no sign of such structural reforms.
The Federal Government is heading in the wrong direction with regard to pensions, according to Potrafke. He further stated that public investments are being strengthened through the new special assets, which is welcomed by many economists.
In conclusion, economists stress the importance of market-oriented structural reforms for sustainable economic growth in Germany. The absence of such reforms is noted as a barrier to sustainable growth in various contexts. The survey findings highlight the need for the government to focus on these reforms to ensure a strong and resilient economy in the long term.
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