Germany Must Take Precautions for the Next Economic Crisis

The German Federal Ministry of Finance’s Working Party on Tax Revenue Estimates has for the second time this year made an upward adjustment of its forecasts for federal, state and municipal tax revenues in Germany up until the year 2021. According to their estimates, government tax revenue is set to rise from 734.2 billion euros in 2017 to 889.6 billion euros in 2022, a greater increase than that previously predicted by the Working Party in May 2017. ZEW research department head Professor Friedrich Heinemann offers his view on the subject.

“The latest tax revenue estimate confirms that, in the history of the German Federal Republic, it has never been so easy to use money to make up for differences of opinion during coalition negotiations. It would, however, be a grave error for the potential coalition partners to try to fully use up this budgetary leeway. Precautions for the next crisis must be taken now while the German economy is still thriving. The federal budget also needs sufficient reserves in order to cover the rising health and pension costs of an ageing population.”

For further information please contact

Prof. Dr. Friedrich Heinemann, Phone +49 (0)621/1235-149, E-mail friedrich.heinemann@zew.de