**Unfavorable Economic Policy Shift by the New Federal Administration**
In the first 100 days of the black-red coalition government, led by Chancellor Friedrich Merz, a mixed picture emerges regarding the impact of their economic policies on growth, according to a survey conducted by the ifo and FAZ panel of economists between July 29 and August 5, 2025.
The survey revealed that 34% of the participating economics professors assessed the government's measures as "rather positive," while 22% judged them "rather negative." A significant number, 39%, saw only "somewhat little" change in economic policy compared to the previous Scholz government, with another 4% even seeing "very little" change.
The expansion of the "Mother's Pension" and the comprehensive reform of the debt brake were the most frequently criticized measures. Economists called for structural reforms to the welfare state, including balancing social insurance funds, stabilising contributions, and avoiding permanent government subsidies to reduce burdens on employees and businesses and stimulate growth.
On the positive side, the strengthening of public investments, the so-called "Investment Booster" through improved depreciation possibilities for companies, additional spending on defense, and first steps in tax policy were positively evaluated. The potential growth effect of additional investments in a high-performance infrastructure was highlighted positively.
However, criticisms included the lack of reform efforts in the area of social systems, the absence of clear impulses for further structural reforms, reduction of bureaucracy, and progress in climate protection. Under "Energy Policy," the reduction in electricity tax only benefits the manufacturing industry was a point of criticism, while the government was accused of relying too heavily on fossil fuels like gas.
Around a third (32%) of economists were neutral towards the economic measures, while 25% drew a positive assessment. Half of the participating economists evaluated the government's economic policy measures as "somewhat positive" for the economic development. Conversely, 30% of participating economists rated the economic measures as "rather negative"; 12% rated them as "very negative."
Despite these criticisms, no clear economic policy shift under the black-red coalition is yet apparent. The majority of participating economists (53%) attributed only limited economic policy competence to the "black-red" government, with 26% considering it "somewhat low" and 5% "very low." Only 14% of participants attributed "somewhat high" economic policy competence to the government under Friedrich Merz.
In conclusion, while the black-red coalition's economic policies have received mixed reviews from economists, the potential growth effect of additional investments in infrastructure and defense has been a frequently cited reason for a positive assessment. However, concerns remain about the lack of focus on growth-promoting measures, the lack of reform efforts in the area of social systems, and the government's approach to energy policy and climate protection.
