Annual Report of Economic Wise Men: An Expert Report with explosive material?

How the economy will develop in the coming year – the economic experts are presenting their annual report today. In this they are apparently somewhat more optimistic than the federal government. Their tax proposals could cause explosives.

The so-called economic experts will present their annual report to Chancellor Olaf Scholz at noon. In the afternoon, the five economists then present their assessment of the overall economic development. In it, they describe the economic situation in the face of high inflation and the energy crisis, but also recommend what course needs to be taken in order to overcome the energy crisis.

As the “Spiegel” reports in advance, the experts are somewhat more optimistic than the federal government in their assessment of the economic situation. Accordingly, they expect growth of 1.7 percent in the current year – which is 0.3 percentage points above the government forecast. The experts also expect a recession for 2023, but it will be mild at 0.2 percent.

Slight decline in inflation expected

In addition, according to a report in the “Süddeutsche Zeitung” (SZ), citing the report, the economists expect inflation to fall slightly in the coming year. The German Council of Economic Experts is predicting an inflation rate of 7.4 percent for 2023, the SZ reported. This would mean that inflation would fall slightly compared to this year, for which economists are expecting eight percent.

In addition, according to the newspaper, the economists advise temporarily demanding a higher top tax rate or energy soli for higher earners in order to make the relief packages more affordable. They are also in favor of longer lifetimes for nuclear power plants.

Approval and rejection of tax proposals

There were different reactions to the tax proposals made by the economists: approval came from the SPD and the Greens, rejection from the FDP and the opposition CDU.

SPD Chairwoman Saskia Esken welcomed “the fact that the economic experts in their annual report take up the SPD’s demands and propose that higher earners and people with very high fortunes get more involved in overcoming the crises”. She spoke in the “Stuttgarter Zeitung” and the “Stuttgarter Nachrichten”.

The CDU SME politician Gitta Connemann criticized the tax proposals of the economic experts in the “Handelsblatt” as “remote from reality and toxic”.

The president of the economic research institute Ifo, Clemens Fuest, expressed doubts. “If you want to raise income taxes in the middle of an economic crisis, you have to justify it very well,” he told the Rheinische Post. “Once an income tax surcharge has been introduced, it will not be abolished again as quickly as the example of the solidarity surcharge shows.”

The Council of Economic Experts advises politicians. The experts are colloquially referred to as economics. For the first time, three women belong to the Council of Experts: the chairwoman, Monika Schnitzer, Veronika Grimm and Ulrike Malmendier. There are also Achim Truger and Martin Werding.