Reference News Network, December 28 report: According to an article titled "Rise Again or Economic Decline? Prospects for Germany's Economy in 2050" published on the Swiss newspaper Neue Zuercher Zeitung website on December 23, the content is as follows:

Germany is experiencing its longest crisis since World War II. Its GDP has remained at the 2019 level. High taxes, energy costs, labor costs, and an increasingly bloated bureaucracy have put Germany at a disadvantage in international location competition. The wave of global protectionism has also made it harder for export companies to operate.

To stimulate the economy and repair deteriorating infrastructure, the German government has pledged a debt-financed spending plan of 500 billion euros. However, experts warn that Germany needs structural reforms to return to the growth track. Companies must reposition themselves, and the public must give up their vested interests.

The challenges facing Germany's business location are huge. Will this country achieve economic revival or continue its economic decline? Here are three possible scenarios for Germany's economy in 2050.

Worst-case scenario: Germany falls behind in economic competition

Once the engine of European growth, Germany has become a "shrinking republic." All aspects—economic output, population, healthcare, and income—are declining, and this situation has persisted for years. In international location rankings, Germany has dropped, ranking only in the mid-to-lower range. Germans have not created new wealth but are living off past savings.

The root cause of the economic crisis is that Germany missed the last reform window in the late 2020s of the 21st century, failed to shift onto a growth path, lacked the courage to cut the bloated social welfare system and place it on a sustainable fiscal basis.

The social insurance contribution rate has exceeded the 50% threshold. Part of the reason is that a large portion of the "baby boomer" generation has reached an age requiring care. Shortages of beds in nursing homes and care facilities have become routine, with waits lasting months or even years.

Furthermore, the German government has continued to raise taxes. The highest personal income tax rate exceeds 50%. The value-added tax rate is approaching 25%.

Companies and high-skilled labor forces have left Germany due to the heavy tax burden. Due to a lack of high-level engineers, doctors, natural scientists, and IT experts, Germany has fallen behind in global technological development. In important future technology areas such as artificial intelligence, quantum computing, and robotics, Germany lags behind other countries.

The German government boasts that it has achieved a climate-neutral economic transformation. However, this has triggered a sharp increase in costs, destroying the industrial base. German companies lack price competitiveness. In Germany's former key areas, suppliers from China and India now dominate world markets.

Even in niche markets where Germany still held a leading position 25 years ago, Germany has lost those positions. Exports have declined sharply, and the current account has turned into a deficit. Germany has gone from being a champion exporter to a champion importer. To pay for the import surplus, Germans have had to borrow abroad, just like citizens of emerging market countries.

Best-case scenario: Germany becomes the king of resurgence

The commitment made by the Christian Democratic Union (CDU) in the 2025 federal election became a reality by 2050: Germany's economy grows at nearly 2%. Germany's location regains competitiveness, companies invest again, exports rise, and productivity increases.

What is the foundation of this success? In 2027, there was a fierce dispute between the CDU and the Social Democratic Party (SPD) over social welfare state reforms. This led to the collapse of the ruling coalition. Subsequently, the CDU and the Christian Social Union (CSU) formed a minority government and had the courage to implement far-reaching reforms in Germany.

The German government halted the expansion of renewable energy that increased costs and canceled the decision to phase out coal power. Like most other industrial nations, Germany reactivated nuclear power plants. German electricity prices no longer exceed those of other industrial countries. The process of deindustrialization was stopped.

In terms of taxation, Germany regained competitiveness. The highest personal income tax rate was reduced to 35%, and the corporate income tax rate was lowered to 10%. To compensate for these tax reductions, the government also cut all subsidies.

The average retirement age in Germany is 67. Those who wish to retire early must accept higher pension deductions. Those who continue working beyond the legal retirement age will receive correspondingly higher pensions later.

Thanks to lower tax burdens than international levels, Germany once again attracted high-skilled labor forces.

Due to the government's abolition of taxes on dividends, interest, and capital gains, holding stocks has become as common in Germany as in the United States. Germany has transitioned from a savings nation to an investment nation.

The government and parliament took "as little legislation as possible" as a standard for measuring success. The expansion of bureaucratic institutions has stopped. Additionally, the government has divested all state-owned shares. Deutsche Bahn (German Railways) has been fully privatized.

The government invested the proceeds from privatization in education and research. Germany has once again become a holy land for top scientists around the world. In international location rankings, Germany ranks among the top.

Realistic scenario: Germany barely passes

By 2050, Germany has turned things around. Although it came late, it is not too late to prevent economic decline. However, this does not mean that Germany implemented the deep reforms necessary to drive the economy back to growth with the required determination.

At least the German government made some corrections in economic and social policies. In the late 2020s of the 21st century, the government reintroduced a sustainability factor for pensions, thereby curbing pension growth. It also abolished the "retire at 63" policy. Those who wish to receive full pensions must work until 67.

To prevent companies from moving out of Germany, the unions agreed to extend working hours and remain restrained in wage demands. This stabilized employment. The trend of falling investment was contained.

The German government has lowered the corporate income tax rate to an internationally competitive level (10%). However, the state continues to levy high personal income taxes on citizens.

Germany's energy prices remain high. This deters investors. Due to the high costs of liquefied natural gas imports and grid expansion, German electricity prices remain high. Therefore, apart from a few niche market suppliers, energy-intensive industries have left Germany.

Although Germany has made some reforms, the economy has not shown significant recovery. In international location quality rankings, Germany remains in the mid-to-lower range. Highly skilled labor, which is crucial for economic growth, still keeps away from Germany. (Translated by Jiao Yu)

Original: toutiao.com/article/7588892962713616934/

Statement: This article represents the views of the author.