Government Quota and Growth Weakness

Veronika Grimm, Professor at TU Nuremberg and one of the German Council of Economic Experts, provided a sobering assessment: Since 2017, employment growth has primarily occurred in the public sector – rising by 24% in political leadership and central administration alone. In contrast, knowledge-intensive services and AI have not generated an increasing contribution to overall value creation since 1997. "Where is growth expected to come from if we do not enable this structural change?" Grimm demanded a shift from a mistrust culture to a trust culture, noting that key actors in businesses, academia, and municipalities need genuine liberties to act. "People in municipalities essentially have no freedom left to act."

Lars Feld, Director of the Walter Eucken Institute Freiburg, pointed to the imbalance in the state budget: With Helmut Kohl's saying – "At a government quota over 50%, we are in socialism" – he described the current state. The reforms enacted so far are correct but far insufficient, with a closing time window: "If we see this at that point, it is already quite late" – meaning the rise in unemployment as a late indicator of structural investment weakness.

Capital Allocation and Pension Reform

Jörg Rocholl, President of ESMT Berlin, noted that Germany does not have a capital shortage problem but rather a massive capital allocation issue: Around 40% of savings are placed in demand deposits and savings accounts with negative real yields. He also warned against the potential loss of Germany’s AAA rating: "Europe needs Germany as an anchor" – a weaker Germany translates to higher financing costs across the Eurozone.

Labour Market Dynamics and the Austrian Model

Nicola Fuchs-Schündeln, President of the Social Science Research Centre Berlin, advocated for positively framing job changes: "Changing one’s employer helps you learn new things and connect with new people." The Austrian severance pay model – as part of occupational pension schemes with transferable funds instead of company-based claims – showcases how flexibility and social security can be reconciled. She noted the need to rethink the social market economy entirely: "We need to rethink the social market economy so that we retain what remains essential to us."

Visions for the Youth and Cultural Change

Stefan Kolev from the Ludwig Erhard Forum offered a provocative political diagnosis: "This Republic can fail." His suggested remedy emphasised young people – the subject of his forthcoming book in autumn "Wealth for the Young." On cultural change, he cited Sweden as an example: In 35 years, it transformed from an anti-capitalist society into one of the most stock-heavy savings societies globally – "This is the Scandinaviatisation of the German welfare state." Politically, he warned against the so-called democracy reaction trap: the tendency of politicians to increasingly craft individual entitlements over general rules. "If we don’t return to designing our laws based on the assumption of equal treatment for everyone, even entire efforts on deregulation won’t matter."

Anja Prummer (FU Berlin) pointed to a systemic communications breakdown: The fragmentation of the media landscape dismantles the common coordination framework essential for reforms. She provocatively stated: "The only party with an answer to this challenge is the AfD" – not through content but consistent grassroots organising in towns and communities. Her call to politicians, businesses, and academics: "We must actively reach out to people to build credibility."

Stefan Kooths from the Kiel Institute warned against framing the reform process as "anti-Christmas": "We cannot explain to people that reforms are being made to make everyone worse off." Overregulation leads to substantial potential reserves– a positive reform dividend is achievable through consistent deregulation. He dubbed the web of well-intended individual measures the "Gulliver syndrome": individual rational measures hampering overall progress. "Everyone has a hand in someone else’s pocket – this translates to a government quota of 50%."

Video

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