Reforms could relieve German budget by up to €60 billion, Ifo says
Germany’s financial situation could be improved by up to €60 billion ($70 billion) annually by 2030 with a series of economic reforms, calculations by the Ifo Institute showed on Tuesday.
The study, commissioned by the employer-funded think tank New Social Free Market Initiative, shows that the government could generate around €54 billion through changes to pension insurance, parental allowance and subsidies.
An additional €6 billion could be generated through growth-promoting investments at the federal level.
“To achieve that, reform packages need to be initiated now that will take effect in the next four years,” Ifo Institute President Clemens Fuest said.
The Munich-based economic research institute calculated a scenario for pension insurance in which pensions would be linked to inflation rather than wages.
The so-called “mother’s pension”, which credits parents for time spent raising children, would be reduced in the next four years to 50% of the current level.
These measures would result in savings of around €20 billion by 2030, compared to the planned spending to date.
The German government would need to spend around €31 billion less if all subsidies that have not yet been approved were to be cut by 60% over the next four years, Ifo Institute said.
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