Berlin. Germany's top economic adviser Monika Schnitzer has accused the federal government of lacking the political will for reform.
Germany's economic advisers slam government for failing on critical reforms
"The government keeps falling behind on its own commitments and the decisions that urgently need to be made," Schnitzer told Welt am Sonntag. She criticized the CDU, CSU, and SPD for entering the federal election—and later coalition negotiations—without concrete reform proposals, instead setting up commissions to tackle major challenges.
"Proposals for social security systems, particularly pensions and health insurance, have been on the table for a long time, but decisions keep getting postponed. Now, to say we won't act because of state elections sends entirely the wrong signal," Schnitzer said.
On pensions, she noted that reform ideas have long been clear: "We need to scale back early retirement options, limit pension increases, and gradually raise the retirement age in line with rising life expectancy." She also called for "consistent implementation of the originally planned hospital reform."
Meanwhile, Ifo Institute President Clemens Fuest urged cuts to housing subsidies to consolidate the federal budget. "Many energy-sector subsidies are unnecessary and create windfall gains—for example, grants for heat pumps and insulation," Fuest told Welt am Sonntag. He argued that lower heating costs already give builders sufficient incentive to properly insulate homes. Beyond that, he identified smaller expendable items, such as tax breaks for home savings plans and the childcare construction subsidy.
In the short term, Fuest proposed two key measures: "As an immediate step, the government could cut all legally non-binding subsidies by a third and impose a hiring freeze in the public sector, excluding national defense."
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