Despite the persistent weak economy in Germany, the "economic practices" do not expect a "broad and profound recession". The German Council of Economic Experts does not currently see any need for a stimulus package in its annual report.
The five experts of the council, also called "economy", however, expect this year only a growth of gross domestic product of 0.5 percent. In the coming year, it should be 0.9 percent. The forecast is thus at the level of the German government's forecast, which, however, anticipates a plus of 1.0 percent for 2020.
Weak economic development, according to the Council, is expected to last at least until next year. The experts nevertheless reject a short-term stimulus package, instead the government should let existing stabilization instruments work. One such example is short-time work for companies in times of economic crisis.
At the same time, the "economic systems" point out that the debt brake which has come under fire and is anchored in the Basic Law does not exclude new debts and indeed leaves room for a modest increase in public investment.
Council calls for better promotion of start-ups
In 2019 and 2020, government measures therefore account for a large part of the overall economy's growth. This year, among other things, this is due to spending on the maternity pension, additional funds for defense, investment and a reduction in the contribution rate to unemployment insurance. In the coming year, the decisions on stronger climate protection would then take effect, in which the state promotes, inter alia, the German railway and electric cars more than before.
The prerequisites for higher productivity growth, however, are education, research and innovation. In view of serious changes in the world of work due to the digital transformation, it is important to strengthen the transformation of knowledge into economic success. In addition, the digital infrastructure needs to be improved.
The "economies" also draw attention to the problem that fewer companies are founded in Germany. Young growth companies needed equity. So far, however, venture capital investments played only a minor role in Germany. In addition, it is about tax incentives.