The president of Germany’s Ifo Economic Institute, Clemens Fuest, has warned of a “dramatic” economic decline in Germany, describing it as a direct threat to the country’s prosperity.
In statements published by Bild am Sonntag, Fuest — who heads one of Germany’s most influential economic think tanks — said that the country has been in economic decline for years and that “the situation is now dramatic.”
He referred to a new Ifo study showing that public spending has increased by 25% since 2015, while private investment has fallen back to levels last seen a decade ago.
In comments echoed by several German media outlets, Fuest warned of the imminent danger of a loss of prosperity, stressing that the decline in private investment “means less growth, less tax revenue, and therefore less money for public services in the medium term.”
The Ifo president also noted that the average standard of living has long been stagnant, leading to a growing social divide, with many Germans already feeling a decline in their quality of life.
In response, Fuest urged the federal government to present by spring 2026 a “comprehensive reform plan” that goes beyond the agreement of the new coalition — in office since May 6, led by the Christian Democratic and Social Union (CDU/CSU) and the Social Democratic Party (SPD).
To this end, he recommended reducing the bureaucratic burden on businesses by eliminating certain documentation requirements related to CO₂ emissions, supply chains, and the minimum wage — measures that, according to him, could generate up to €146 billion in additional wealth per year.
