Necessary Reforms
Pension Reform
Marcel Fratzscher, President of the German Institute for Economic Research, calls for a pension reform that ensures that pensions are not redistributed more heavily from young to old and from poor to rich. He suggests raising the retirement age and limiting future pension increases to avoid unduly burdening the younger generation.
Tax Reform
Fratzscher emphasizes the necessity of a fundamental tax reform that enables the alleviation of labor through the reduction of subsidies and tax privileges. A greater burden on large fortunes should also promote a fairer distribution of income.
Structural Reforms
Together with leading economic experts, the recruitment and integration of skilled workers from third countries is demanded, as well as a reform of the pension insurance to limit the rise in contribution rates.
Impact on the Economy
Economic Challenges
In light of the forecast that the German economy will shrink for the second consecutive year in 2024, Fratzscher underscores the importance of reforms, especially for the year 2025.
Coalition Agreement
The current coalition agreement, according to Fratzscher, provides hardly any relief and could force a redistribution from poor to rich due to cuts in funding programs.
Tax Reductions
Planned tax reductions for small and medium-sized enterprises could have positive economic effects in the long term, although they might reduce tax revenues in the short term.
Impact on Investors and Savers
The proposed reforms could improve the financial stability of pension insurance and strengthen investment willingness. A fairer distribution of wealth through tax reforms could also increase the attractiveness of Germany as a location.