Top financial institutes warn that in order to have long -term benefits from the Berlin investment package, it must be accompanied by radical reforms. The only way to bring long -term benefits the government investment package is to be accompanied by substantial structures.

This is pointed out in their autumn report by Germany’s top financial institutes, while predicting that it is expected to grow on the limits of stagnation (0.2%) for 2025. For 2026 (1.3%) and 2027 (1.4%) the forecasts are better – but dynamic could be stopped abruptly after this two years.

Serious ‘structural weaknesses’

Geraldin Danny-Gnendlik of the German Institute of Economic Research (DIW) spoke of serious “structural weaknesses”, while warning that “prospects for growth continue to worsen” and “structural problems are simply concealed”.

High costs, lack of specialized workforce and reduced competitiveness threaten growth – and at the same time further deterioration of US trade relations could further intensify general uncertainty.

“US tariff policy throws its shadow in the world economy in the fall of 2025,” DiW’s economist Hannah Ziddl said. Although many countries and the EU have entered into trade agreements with Washington, these agreements “consolidate a high level of duties”.

The German economy as… a drug addict

In a caustic parallel, Stefan Kouts of the Kielos Institute for the global economy commented that in the context of Merz’s fiscal policy, the German economy is now taking a billion of billions of euros, such as a … drug addict who takes his dose. “A drug addict who is given a full syringe will feel better after his dose, but no one – certainly not a doctor – will not think:” Oh, now the patient has recovered, “Kouts said.

The top institutes emphasize in every way that the growth expected between 2026-2027 will retreat if no key structural reforms are implemented.

Experts call on the government coalition to seek more to enhance the competitiveness of the German economy and businesses. In a twelve -point plan, they propose, inter alia, to avoid further burden on German companies by tightening the legal framework to protect the environment, to enhance employment incentives for older citizens, to intensify the digitization of public administration and not to increase the tax.

Mertz promises ‘autumn reforms’

The new warning of experts further intensifies the pressure on Chancellor Mertz.

The latter recently committed to a “autumn reforms”. However, as Bild has recently reported, business circles criticize Mertz that he is not speeding up to the implementation of important reforms. In September, the business climate unexpectedly declined, with the president of the IFO Institute of Munich, Clemens Fouss, explaining that this is probably due to the concern that the money that Germany will borrow will be used “to close holes in the budget”.

Sources: Spiegel, Tagesschau, Handelsblatt