IfW in the News

Germany coalition set to turn on the spending taps

27.03.2018

Jens Boysen-Hogrefe warns, that due to the demografic change German budget will face major headwinds

Excerpt from the article

(...) "German’s economy is in rude health. It grew 2.2 per cent last year, its fastest rate since 2011. Employment is at its highest since reunification in 1990. Exports are booming and tax revenues flooding in. Many believe there is scope for higher spending, particularly on crumbling infrastructure. But warnings are plentiful that the good fortune will not last — and that Germany, which has accumulated enviable surpluses while urging the rest of the eurozone to do the same, may soon have less to boast about.

“In four, five, six years, when Germany’s demographic situation really starts to deteriorate, the interest-rate environment changes and the economic boom is over, the budget will be in a different state,” says Jens Boysen-Hogrefe of the Kiel Institute for the World Economy. “We will be facing major headwinds, and we should be preparing the tax system for that.”

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