Summary: The Ifo Institute calculates that targeted policy changes could raise Germany's net fiscal position by up to €60 billion per year by 2030. The assessment, prepared for the New Social Free Market Initiative, spells out specific measures in pension insurance, parental credits and subsidy reductions, alongside an allowance for growth-promoting federal investment.
The Munich-based Ifo Institute said its modelling points to about €54 billion of potential fiscal improvement stemming from reforms to pension insurance, parental allowance and the trimming of subsidies. On top of that, the institute attributes an additional €6 billion to measures described as growth-promoting investments at the federal level.
"To achieve that, reform packages need to be initiated now that will take effect in the next four years," Ifo Institute President Clemens Fuest said.
The study outlines a pension scenario that would change the basis for pension increases: under the model, pensions would be linked to inflation rather than to wage growth. The researchers also model a reduction in the so-called "mother's pension," which compensates parents for time spent raising children. In the scenario the mother's pension would be scaled back over the coming four years to 50% of its present level.
According to the Ifo calculations, those pension-related adjustments would yield savings in the order of €20 billion by 2030 when compared with planned spending to date. Separately, the institute estimates that trimming subsidies that have not yet received approval - cutting those commitments by 60% over the next four years - would reduce government spending by around €31 billion.
The study frames the projected gains as contingent on the timely initiation of reform packages so they can take effect within a four-year window. The analysis was produced at the request of the New Social Free Market Initiative, an employer-funded think tank. The results break down the sources of fiscal improvement into pension design, parental allowance adjustments, subsidy reductions and federal investment choices.
Impacted areas: The measures outlined primarily concern public finances and social insurance arrangements, with implications for federal budget planning and targeted federal investments.