Assessment of the initial 100 days of the federal government by economists: Criticism directed at pension reform and debt control measures
The Ifo Institute's economist panel, consisting of 170 professors of economics, has expressed a mixed response to the economic policy measures of the current black-red federal government in Germany as of mid-2025.
Main Concerns
The panel highlighted several areas of concern, including the ongoing uncertainty in the economy, particularly in relation to external factors such as tariff disputes affecting the export industry and specific sectors like chemicals. The labor market is also showing signs of weakness, with job cuts continuing albeit at a slower pace, and the self-employed sector and microenterprises remaining under pressure. There is also a mixed sentiment across various sectors, with some sectors like manufacturing and services showing optimism, while others like chemicals and certain logistics segments are less confident.
Positive Aspects
Despite these concerns, there are some positive aspects to note. The Ifo Business Climate Index has shown a moderate improvement, reaching its highest level since May 2024, indicating a tentative stabilization or recovery in business sentiment among firms. Export expectations have also improved, with a roughly balanced outlook between positive and negative outlooks, suggesting hope for resolving tariff disputes that have weighed on international trade. Notably, sectors such as food manufacturing, logistics, construction, and retail have shown strong positive shifts, signaling a recovery after prior declines.
Interpretation from Ifo Experts
The Ifo Business Climate Index, a leading economic indicator, reflects that firms weigh both internal factors like profits and demand and increasingly the external economic policy environment and general sentiment. This implies that while internal business conditions are improving, firms remain sensitive to policy uncertainties and global economic developments, which influence business confidence.
In summary, German economists surveyed by the Ifo Institute recognize cautious improvements in economic climate and sectoral recovery but highlight persistent risks in the labor market, external trade uncertainties, and self-employed economic pressures as key concerns regarding the government’s economic policies. This balanced assessment underscores the complex and uneven nature of the current economic situation under the black-red federal government.
Key Findings
- Only a quarter (25%) of the economists surveyed drew a rather positive balance.
- The reform of the debt brake also faces criticism from some participants.
- Niklas Potrafke, an Ifo researcher, criticized the measures of the federal government on pensions, stating they are going in the wrong direction.
- Half of the respondents expect rather positive effects of the federal government's measures on the economy in the short term.
The panel was conducted by the Ifo Institute and the "Frankfurter Allgemeine Zeitung" between July 29 and August 5, 2025.
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