Economics Professors Critical of German Traffic Light Coalition’s Economic Policy
Halfway through the legislative period, economics professors take a dim view of the economic policy pursued by Germany’s traffic light coalition. This is according to the latest ifo and FAZ Economists Panel, in which 205 economics professors took part in September. “The participants are especially critical of the traffic light coalition parties’ proposed energy policy,” says ifo researcher Niklas Potrafke. In light of Russia’s war of aggression, 58 percent are against the permanent phaseout of nuclear power; 38 percent are in favor. “By phasing out nuclear power, we cut off a climate-friendly source of energy and lose yet more ground in international competitiveness due to high energy prices,” Potrafke says.
When it comes to a subsidized industrial electricity price, which is currently the subject of controversial debate within the coalition, 83 percent of the economists surveyed are against and only 13 percent are in favor. “An industrial electricity price would reduce the incentive for companies to make production more energy-efficient. In addition, the government runs the risk of being locked into paying subsidies,” Potrafke says.
A total of 60 percent of the economists also reject the new “Heating Act,” while 32 percent embrace it. But there is support for raising the minimum wage from EUR 12.00 to EUR 12.41 per hour as of January 1, 2024 (64 percent for, 29 percent against). Table 1 shows the extent to which the professors support the individual economic policy measures.
Midway through the legislative period, the traffic light coalition received an overall grade of 4.0 (on a scale of 1–6, with 1 being the best).
Support for economic policy measures in percent
| Yes | No | ||
| State-subsidized industrial electricity price | 13 | 83 | 4 |
| Nuclear phaseout | 38 | 58 | 4 |
| New Buildings Energy Act (“Heating Act”) | 32 | 60 | 8 |
| Increase of basic allowance (Bürgergeld) by 12 percent | 33 | 55 | 12 |
| Increase of minimum wage to EUR 12.41 | 64 | 29 | 7 |
| Income limit for parental allowance | 46 | 42 | 12 |
| Legalization of cannabis | 34 | 40 | 26 |
