Economic turnaround
Ifo boss calls for a turnaround in government spending
Economist Clemens Fuest draws up a “Growth Agenda 2030”. The list of proposals ranges from nuclear energy to immigration.
Ifo President Clemens Fuest is calling for a turnaround in economic policy. “Germany is facing enormous challenges in view of new geopolitical risks, advancing climate change and a lack of economic dynamism,” says the economist. “Now many issues need to be addressed in parallel.” Above all, the state must promote investment, increase efficiency and adapt tax and transfer systems. The list of suggestions from the Ifo Institute in Munich is long, some quite controversial.
Government spending: Here Fuest is calling for a reorientation towards investments in defense, education, climate protection and infrastructure and away from social transfers and subsidies – for example for the establishment of chip factories. Labor shortage: Longer working hours per employee and increased immigration of workers should help here. Energy and climate change: According to Fuest, climate goals should be achieved through market mechanisms, for example a CO2 price. But nuclear energy should also be used again. Germany needs an increase in energy supply.Radical reduction in bureaucracy: An example that Fuest has already given in the past is the approach of eliminating documentation requirements and instead controlling companies and imposing significant penalties for violations.Tax system: Work and investments should be relieved , consumption and basic acquisition are placed under greater strain. Fuest also calls for the tax system to be simplified. Foreign trade: The European internal market should be deepened and new free trade agreements should be concluded. Together with improved defense capabilities, this should make Germany less vulnerable to changes in the geopolitical situation.
Fuest cites the Israeli economy as an example of how geopolitical challenges can be dealt with. The high war costs are being financed there with a mixture of increased new debt, an increase in sales tax and cuts in other expenses.
Despite all the crises, it was possible to limit national debt, invest in education and build one of the world’s most successful start-up structures.
dpa
Source: Stern
