“Germany's economy at a crossroads": Clemens Fuest outlines ways out of the crisis at the Korbinians Kolleg at the Bachmair Weissach Spa & Resort

Germany Faces Economic Challenges, but Solutions Exist – The Key Message from Prof. Dr. Dr. Clemens Fuest at the Korbinians Kolleg at Spa & Resort Bachmair Weissach

Germany is facing significant economic challenges, but there are ways out of the crisis—this was the central message delivered by Prof. Dr. Dr. Clemens Fuest, President of the ifo Institute, during his lecture before more than 300 guests at the Spa & Resort Bachmair Weissach. At the Korbinians Kolleg, the renowned economist analyzed with relentless precision how Germany’s economy can be brought back on track.

His diagnosis: stagnation instead of growth, declining investments, and an aging population increasingly straining the labor market. "We are stuck while other countries in Europe are growing," Fuest observed, stressing that government subsidies merely mask the problems. Particularly alarming: Despite rising employment numbers, total working hours are decreasing due to a rise in part-time work. The balance between work and leisure has fundamentally shifted in Germany. Fuest was clear: "It has to be worthwhile to work again."

Urgent Need for Action on Corporate Investments

Germany's most influential economist also sees an urgent need for action in corporate investments. Production facilities are being relocated abroad, while Germany remains heavily reliant on medium-level technologies such as mechanical engineering and the automotive industry. Fuest sees growth opportunities in the broader use of technologies—not just their development. Yet, he remains realistic: "Germany is transitioning from a manufacturing country to a research and development hub, but we are still far from making Europe one of the most productive, knowledge-based economic regions."

A Clear Economic Policy Agenda for 2030

To escape economic stagnation, Fuest presented a clear economic policy "Agenda 2030," primarily addressed to the future federal government. First and foremost, further harm must be avoided—such as introducing a wealth tax or rent controls, which could further stifle investment. Fuest emphasized the need to strengthen Germany’s resilience, from increased defense spending and cybersecurity to protecting critical infrastructure.

Equally crucial is creating incentives for employment—through tax and welfare system reforms, better work-life balance solutions, and targeted measures to promote labor market immigration. To make Germany more attractive for investments, Fuest called for tax relief on investments, a steady flow of public investments, a consistent reduction of bureaucracy, and digitalization of processes.

Energy and Climate Policy: Less Regulation, More Innovation

In energy and climate policy, Fuest demanded fundamental changes: fewer small-scale regulations, a stronger market focus in electricity market regulations, and a return to nuclear energy as potential game-changers. Additionally, he advocated for an innovation drive and more support for start-ups—especially in future industries such as biotechnology, artificial intelligence, and aerospace.

Another priority is deepening the EU single market and expanding international free trade agreements to unlock new growth opportunities.

Call for Change and Courage for Reforms

In the subsequent discussion, Fuest warned against clinging to outdated structures: "Instead of preserving the old, we should create space for the new." His optimistic message: Germany has the opportunity to set the right course—if politicians have the courage to implement real reforms.

With his wake-up call, Germany's most influential economist not only pointed out the problems but also offered hope that these challenges can be overcome with clear goals and bold decisions. "Without clear goals and a positive vision, economic prosperity cannot be secured," Fuest concluded, urging both politics and society to stop postponing necessary change.

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Fuest’s Key Quotes Highlighting His Sharp Yet Analytical Perspective on Germany's Economic Challenges:

• "The tailwind of the past has turned into headwind."
• "We have developed our welfare state to a point where it no longer pays to work."
• "We are witnessing structural change: Germany is transitioning from a manufacturing nation to a hub for research and development."
• "Prosperity arises when technology is applied, not just when it is developed."
• "Without peace, everything else is meaningless."

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The Korbinians Kolleg at Spa & Resort Bachmair Weissach

The Korbinians Kolleg took place on November 13, 2024, at the Spa & Resort Bachmair Weissach, with over 300 distinguished guests in attendance. The event featured keynote speaker Prof. Dr. Dr. Clemens Fuest, President of the ifo Institute and Professor of Economics at LMU Munich, accompanied by his wife, Ana Maria Fuest.

Also in attendance were curator Prof. Dr. Wilhelm Vossenkuhl, host and organizer Korbinian Kohler, publisher Dr. Wolfram Weimer and his wife Christiane Götz-Weimer, politician Dr. Beate Merck, Max Böltl (CSU Member of the Bavarian State Parliament for Munich-Land-Nord), Daniel Artmann (CSU Rosenheim), artist Suse Kohler, Bunte editor Katrin Sachse, Dr. Franz Georg Strauß and his wife Birgit, Focus editor Georg Meck, and many more.