DW / Dimitra Kyranoudis

The German economy has been on the verge of recession for some time.

According to new data released by the German Statistical Office, German GDP shrank by 0.3% from October to December 2023, while two more quarters of stagnation had preceded it. However, the forecasts of the Ifo economic institute for the first quarter of 2024 are already ominous, during which a further reduction of the German GDP by 0.2% is expected.

At the same time, a new bell comes from the Committee of the “Wise” of the German Economy, which has advisory powers to the German government. In their letter to the German government, the “Wise Ones” consider that the debt brake rule, which limits new lending, is in its current form “rigid” and needs revision.

The “Wise Ones” propose a series of reforms for more fiscal flexibility depending on the debt ratio and taking into account the general picture of the economy each time.

In the meantime, it has started in the German debate on the 2024 budget, which foresees 477 billion in spending, i.e. 34% more than in the years before the pandemic. At 39 billion euros, new borrowing also moves with parallel observance of the constitutional rule of the debt brake despite the difficulties expected even in 2024.

But criticism from the opposition is already strong, with Christian Democrat leader Friedrich Merz noting that over the past five years spending has risen by 36% while GDP is shrinking.

In the midst of all this, today the doctors of university clinics are on strike demanding better wages and better working conditions, while on Friday the MMM, buses, metro and trams in all German states except Bavaria will go on a warning strike, according to the Verdi union.