Status: 05/17/2022 10:36 a.m
Worse growth prospects, slower productivity gains, aging population. A study by the economic consulting firm Deloitte shows deficits in Germany’s economy.
In the midst of the ending corona pandemic and the Ukraine war, the German economy is at a crossroads. This is the result of a study by experts from the consulting firm Deloitte. They call for clear economic policy measures to maintain prosperity in Germany.
Faster digitization, flexible labor market
More working women, more digitization and more start-ups: According to the study authors, these are the prerequisites for keeping Germany on the growth path of the past decades. “How the course is set in the coming years will determine the future prosperity of the country and the quality of life of future generations,” says Volker Krug, Germany boss of Deloitte.
The fact that the level of prosperity in Germany is on the brink is shown above all by the slowdown in productivity in Europe’s largest economy. According to the study, productivity growth in Germany has halved over the past decade compared to the previous ten-year period.
This is particularly bad in view of an aging society with a declining working population. If it is not possible to reverse the negative productivity trend, the location will lose competitiveness, emphasize the Deloitte experts.
growth laggards
In terms of growth, Germany is actually becoming more and more of a straggler at the European level, as they are also showing current economic forecasts published yesterday by the European Commission. According to this, the Commission believes that Germany can only grow its gross domestic product (GDP) by 1.6 percent in the current year. So far, the forecast had been 3.6 percent.
For the coming year, the forecast was reduced from 2.6 to 2.4 percent growth. This means that growth in Germany in 2022 will also be weaker than in the euro area as a whole, where growth of 2.7 percent is expected.
Digitization, flexibility and less bureaucracy
According to the Deloitte experts, with the “right” policy, annual growth rates of 3.4 percent would be possible in Germany in the coming years. The labor market is a key lever in this regard. Automation cannot compensate for the increasing shortage of skilled workers. But with flexible working hours and extensive childcare, more women could work full-time. A higher labor force participation rate among foreign and older citizens would also help.
However, this also requires software investments and rapid broadband expansion, and Germany must “take a more determined approach to digitization and significantly increase the speed of implementation,” according to the study. Last but not least, more venture capital investments and less administrative effort would enable a real “growth boost”.
students below the poverty line
However, the economic situation with sharply rising prices creates a difficult starting point for the next generation, which is supposed to drive growth in Germany in the coming decades: According to the Paritätischer Wohlfahrtsverband, almost a third of all students live in poverty. According to a study published in Berlin today, 30 percent of all students in Germany are affected.
Four out of five of the students living alone live below the poverty line. The average income of poor students is 802 euros. This puts them 463 euros below the poverty line.
BAföG is not enough
Not only 80 percent of single-person households are disproportionately affected by poverty, but also 45 percent of students with BAföG. Ulrich Schneider, General Manager of the Paritätisches Gesamtverband, therefore calls for a far-reaching BAföG reform.
Especially in view of the current price increases, there is a risk of further heavy burdens, debt and dropping out of studies for many poor students. According to the association, the previously planned increase in BAföG rates by five percent to EUR 449 in the future does not even compensate for the real loss of purchasing power due to the current inflation.