Germany's Growth at Risk of Zero as Economist Slams €500B Fund
Economist Ulrike Malmendier has warned that Germany's economic growth could soon stall at zero. Her remarks come as forecasts hover around just one percent, with rising risks from fuel prices and supply chain pressures.
She criticised the government's €500 billion special fund, calling it ineffective in boosting investment and squandering half of potential long-term growth. Malmendier served on the German Council of Economic Experts, where she insisted her views were data-driven, not politically motivated. She highlighted persistent protectionism within the EU as a major barrier, blocking a unified market of 450 million consumers.
The €500 billion fund, launched in March 2025 (backdated to January 1, 2025), aimed to support infrastructure and climate projects. Around €37 billion was earmarked for 2025 spending, but Malmendier dismissed its impact. She argued that poor implementation had wasted half the fund's growth potential.
While praising the EU's new company structure—set up in just 48 hours—she called it insufficient for driving real economic expansion. Geopolitical tensions and government policies, she warned, could deepen long-term damage. Without stronger coordination on energy and a more integrated single market, further losses could push growth back to zero.
Rising fuel costs and strained supply chains have added to the economic strain. Malmendier stressed that without urgent reforms, recovery would remain fragile. The special fund, despite its scale, has failed to deliver the promised investment boost. Malmendier's warnings point to deeper structural issues—protectionism, energy policy gaps, and weak EU market integration.
If these challenges persist, Germany's already modest growth forecasts may shrink further. The economist's assessment suggests concrete policy shifts are needed to avoid prolonged stagnation.
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