Hans-Werner Sinn warns of significant decline in German living standards

Economist Hans-Werner Sinn, former president of the ifo Institute, has issued a stark warning regarding the future of Germany and Europe. He predicts that living standards in Germany will decline significantly in the coming years, describing the current economic situation as the most severe crisis since the Second World War.

Sinn attributes this pessimism to several structural factors, including the war in Ukraine, high energy prices, low birth rates, and what he characterizes as excessive environmental measures. He specifically criticized European Union CO2 regulations, labeling them an “attack on the heart” of the German automotive industry, and called for the abolition of supply chain rules.

Regarding domestic policy, Sinn argued that current economic growth is not structural but is instead dangerous because it is primarily financed by new debt. He warned that continuing this path could jeopardize Germany's credit rating. He further called for a radical course correction, suggesting the need to “undo 15 years of Merkel-era policies” concerning energy, pension, and social welfare to restore industrial competitiveness.