Economists Call for Investment Over Austerity to Revive German Economy

A new study emphasizes infrastructure spending, energy price stabilization, and EU-coordinated industrial policy as solutions to Germany's economic stagnation.

Germany's economy is projected to grow by just 0.1% in 2025, continuing a period of stagnation attributed to global economic shifts rather than domestic labor or social costs.
The IMK study identifies geopolitical tensions, including U.S.-China trade conflicts and energy price shocks, as key factors impacting Germany's export-reliant industries.
Economists recommend a state-led investment strategy focusing on infrastructure modernization, such as roads, schools, and energy networks, to boost domestic demand.
A temporary, state-subsidized 'bridging electricity price' is proposed to stabilize energy costs for businesses and households during the transition to renewable energy.
The report advocates for an EU-coordinated industrial policy to support key sectors like mobility, energy, and semiconductors in adapting to global challenges and fostering innovation.