Economist sees great contradictions: Fratzscher: Traffic light financial plans are not solid

Economist sees great contradictions
Fratzscher: Traffic light financial plans are not solid

DIW chief economist Fratzscher finds the fiscal plans of the traffic light government highly contradictory. In particular, the financing of the social systems, such as the large item of pensions, is unclear. The SPD, Greens and FDP have proclaimed a “decade of investment in the future”.

According to DIW President Marcel Fratzscher, the plans of the Ampel coalition for the federal budget and for pensions are not solidly financed. “The coalition agreement not only does not resolve the contradiction of tax cuts, compliance with the debt brake from 2023 and higher government spending, but intensifies it,” said Fratzscher of the “Rheinische Post”.

The contract did not contain any proposals that would be sufficient to finance the enormous future projects, said the President of the German Institute for Economic Research (DIW). This also applies to the financing of the social systems. “The financing of the social security systems, especially the statutory pension, whose costs will explode in the future and require early countermeasures, also remains unsolved,” said Fratzscher. “The coalition should improve this in the coming months.”

The future traffic light government made up of the SPD, the Greens and the FDP presented its coalition agreement on Thursday, proclaiming a “decade of future investments”. At the same time, she wants to comply with the debt brake again from 2023; unnecessary or environmentally harmful subsidies are to be dismantled.

When it comes to old-age pensions, the coalition is foregoing pension cuts and a higher retirement age. In order to secure this commitment, the entry into a partial capital coverage of the statutory pension insurance should be completed.

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