“The next federal government needs courage and honesty”

Following yesterday's Bundestag elections, DIW President Marcel Fratzscher commented on the results and the challenges facing the new German government:

Germany‘s federal election marks a turning point. The Social Democrats are the biggest loser, and even though the Conservatives have emerged as the election winner, they have performed remarkably poorly. As a result, their coalition could struggle to push through a bold and urgently needed reform agenda. Economic decline, social polarization, and the continued rise of the rightwing extremist AfD would be the inevitable outcome.  

The potential coalition partners should now put their feuds aside and get to work on the coalition agreement. In a world of escalating crises, Germany must finally break free from its political and economic paralysis.  

A new federal government should set three major priorities. First, it must regain the lost trust and offer citizens and businesses a clear perspective for the future. The new government needs courage and honesty because the next four years will be tough for Germany and the most difficult of the last 75 years.

Above all, businesses in the industrial sector, but also citizens, will have to prepare for sacrifice and hardship. The transformation of the economy and society means change, and inevitably there will be losers. Secondly, the new government should prioritize an investment offensive, focusing both on infrastructure, innovation, and education, as well as defense. It should avoid dogmatic disputes and finance investments pragmatically through special assets, as a meaningful reform of the debt brake is likely impossible.  

As a third priority, the new government must radically change its course on Europe. Germany will only be able to safeguard its own interests as part of a strong and united Europe. Germany must not continue to weaken Europe, as some parties called for during the election campaign. Instead, we need a primarily common European approach on defense, the internal market, innovation, and competitiveness.