Germany is under economic pressure. And the debate in Berlin goes in circles. While politicians argue about new sources of income and welfare state reforms, economist Dr. Daniel Stelter gave a tough assessment in an interview with “Welt TV”: Without real reforms, the country is at risk of permanent decline.

The economist calculates that Germany is currently only achieving potential growth of 0.4 to 0.5 percent. A breakout from this stagnation is hardly possible without a fundamental course correction. Stelter sees the cause as the price of years of political restraint.

Stelter remains tough on “Welt TV”: “Any kind of tax increase in this environment is poison.” In a structural crisis like this, such a measure would permanently push growth below 0.5 percent.

Not more taxes – but less waste

Stelter is not calling for further digging into citizens’ pockets, but rather a cut in government spending. Germany currently provides more than 130 billion euros in subsidies. The state should drastically cut this instead of controlling the economy with subsidies.

In addition, the state must become leaner, more digital and more efficient. Concepts for pension and health care reform have long been available. Nobody has implemented it because they fear political headwind.

Merz against tax increases – but credible?

Chancellor Merz officially rejects tax increases. However, the top economist reminds us that in the past, announcements and actions often diverged. On the other side is an SPD that, according to Stelter’s critics, spends money without achieving a lasting effect.

His conclusion is succinct: The tax lemon has been squeezed. Anyone who now wants more money from citizens is deepening the crisis. Real social justice does not come from redistribution, but from a state that functions and dares to tackle reforms.