Habeck’s annual economic report: Growth shouldn’t be the only benchmark

Minister Habeck wants to set new accents in his first annual economic report. His goal is an “ecological-social market economy”. New aspects should also be included in the report.

He wants to bring prosperity and climate protection together. And at the same time ensure continuity and departure in his ministry and economic policy. Robert Habeck knows that it won’t be easy:

This is what Habeck said when he took over the management of the Ministry of Economics in December – which is now also responsible for climate protection.

New accents in the annual economic report

His program for the further development of the social market economy includes redesigning the annual economic report.

Growth alone should no longer be the sole benchmark; When measuring prosperity, other criteria would also be taken into account, explains Habeck’s State Secretary Sven Giegold: “We will also look at whether we are protecting the climate, whether social inequality is increasing or decreasing. Whether children have a chance in our society, even if they come from poorer homes.”

An expanded wealth measurement as a goal

Expanded measurement of prosperity – that’s the goal. The annual economic report gives a really comprehensive look at the economy and not just at what you can quickly use in money, Giegold continues.

Behind these innovations are considerations that are also being discussed among economists, but are at the same time controversial. On the one hand, it is clear that higher growth does not automatically mean that people are better off, which is why other welfare indicators have been under discussion for years – including attempts to measure happiness.

Neither overestimate nor underestimate GDP development

But lower growth or even a slump in the economy like in the Corona year 2020 – many people feel that negatively. One should therefore neither overestimate nor underestimate the development of the gross domestic product (GDP), says Stefan Kooths from the Kiel Institute for the World Economy: “One is well advised not to overstrain this figure.” The GDP is an important basis for many other decisions, including those of the state – “because economic activity can be taxed. Luck, for example, or any detached welfare indicator, you just can’t tax it.”

In addition to the number of economic activities, as summarized in the gross domestic product, other factors, such as social factors, can also be considered. But distribution issues or environmental aspects should not be lumped together with growth. Otherwise there is a risk that economic policy will become unclear.

Don’t neglect growth

However, the state must create the framework conditions for economic activity to take place in its area, says Kooths. And the more of them there are, the greater the gross domestic product, “and the greater the scope for shaping economic policy.”

The economist therefore advises not to neglect growth when redesigning the annual economic report – also in terms of politics, which needs money to finance the energy transition and climate protection.