Overview
- Germany’s audit office projects the federal budget will not cover core duties by 2029, and economist Monika Schnitzer urges faster approvals and genuine investment from special funds, warning the government may ultimately need to reverse measures or consider tax increases.
- Coalition parties are split on advancing corporate tax cuts, with the SPD insisting on concrete offsets and proposing higher top rates and changes to inheritance tax that conservatives oppose.
- Chancellor Friedrich Merz told CSU audiences that greater effort is required to restore prosperity, arguing a four‑day week and a focus on work‑life balance will not deliver the needed economic performance, while noting recent gains in orders, low inflation and strong start‑up formation.
- Weaknesses remain in key indicators, with large industrial job losses since 2019, nearly three million unemployed, a 2025 insolvency high reported by the IWH, and stagnating exports.
- Bavarian premier Markus Söder suspended his patronage and attendance at the 2026 Ludwig‑Erhard‑Gipfel, canceled the customary state reception and cited a “gray area” as compliance reviews continue, while past public funding and future ministry cooperation are under scrutiny and some officials say they will not attend.