Leaving aside increasing defence spending, the new administration faces a challenging list of reform priorities: establishing a clear industrial strategy, modernising Germany’s energy infrastructure, and implementing long overdue reforms in taxation, the pension system and the labour market. Together, these measures can enhance Germany’s economic competitiveness, raise growth and address growing defence and welfare spending pressures.
Increased Focus on Lowering Energy Costs from the New Government
Germany’s weak growth outlook reflects its declining international competitiveness, with high energy costs a particular problem. After post-pandemic price surges, EU natural gas prices in 2024 remained approximately five times as high as in the US. This compares with prices being approximately…
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