Reforms could relieve German budget by up to €60 billion, Ifo says
Germany could significantly improve its public finances through major economic reforms, with potential annual savings of up to €60 billion by 2030, according to new calculations from the *Ifo Institute*.
The study was commissioned by the employer-funded think tank *New Social Free Market Initiative* and suggests that a combination of welfare and subsidy reforms could substantially reduce government spending. Around €54 billion could be saved through changes to pension insurance, parental allowance, and various state subsidies.
An additional €6 billion in savings could come from increased growth-oriented investments at the federal level. Together, these measures could ease pressure on Germany’s budget at a time of rising fiscal challenges.
Ifo Institute President Clemens Fuest emphasized that reforms need to begin immediately if they are to take full effect within the next four years. The study outlines a scenario in which pension payments would be adjusted to follow inflation instead of wage growth, which would reduce long-term costs.
Another proposed measure involves cutting the so-called “Mütterrente” (*mother’s pension*), which compensates parents—mainly mothers—for time spent raising children. Under the model, this benefit would be reduced to about 50% of its current level over the next four years.
The research also suggests reducing government subsidies that have not yet been approved, potentially cutting them by 60%. According to the institute, this alone could lower federal spending by around €31 billion. Combined, the reforms are presented as a pathway to stabilizing Germany’s finances, though they are likely to face political resistance due to their impact on social benefits.