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German Economic Advisers Cut Outlook, Rebuke €500 Billion Fund for Limited Growth Impact

The annual report finds much of the planned spending is not genuinely additive, warning a fragile upturn now leans on state outlays rather than private investment.

Overview

  • The council now projects GDP growth of 0.2% in 2025 and 0.9% in 2026, undershooting the government’s 1.3% view for next year.
  • Less than half of the SVIK expenditures qualify as additional investment, leading the advisers to urge clear legal rules, strict ‘additionality’ and independent monitoring.
  • The report says 2026 growth will be propped up by higher public spending and more workdays, with inflation near 2.1% and unemployment edging to about 6.1%.
  • The economists call for reforms to inheritance and gift taxation and propose a state‑supported ‘Vorsorgedepot’ to build wealth for lower‑income households.
  • Member Veronika Grimm files a minority opinion opposing tougher taxes on business inheritances in a weak investment climate, while Chancellor Friedrich Merz says he will pair the fund with deregulation and faster permits.