Government subsidies in Germany rose again in 2018 and reached a new high for the fifth time in a row. This emerges from a study of the Kiel Institute for the World Economy (IfW). Accordingly, the financial assistance from the Federal Government over the previous year increased by 7.5 percent to 56 billion euros. Tax benefits increased slightly to 62 billion euros.
According to the researchers, subsidies worth more than 18 billion euros should be canceled without replacement. A case for the red pencil in particular grants and benefits for agriculture in the amount of 2.8 billion euros. The promotion of electromobility and microelectronics (0.8 billion euros) and the VAT rebate for hoteliers (1.4 billion euros) should, according to the researchers on the strike list.
The waiver of useless or even harmful subsidies could, according to IfW CEO Gabriel Felbermayr free funds for new investments. "In addition, the money is inevitably missing elsewhere, such as higher education spending, research funding, the rehabilitation of dilapidated infrastructure or for debt reduction and tax cuts."
Further subsidies amounting to 74.9 billion euros, the state should, according to IfW, subject to a critical review - such as the funds for the provision of public transport in the amount of 8.5 billion euros. While this support is correct, the authors of the study are critical that not all routes and contracts are awarded by tender.
Felbermayr also warned Federal Minister of Economics Peter Altmaier, "not in the same problematic subsidy kit" to seize the planning of a national industrial strategy. Instead of relying primarily on subsidies for individual industries or companies, it must be about strengthening the business location in its entirety.
