Hans-Werner Sinn criticism of German economic policy

Economist Hans-Werner Sinn, former president of the ifo Institute, has issued warnings regarding Germany’s economic stability and climate transition goals. Initially, Sinn characterized Germany’s 2045 climate neutrality targets as “unrealistic,” arguing that the current energy transition path risks deindustrialization due to high costs and excessive regulation. He suggested that European-only climate efforts are ineffective and advocated for international agreements over EU-wide CO2 limits.

Sinn subsequently intensified his critique, describing Germany’s current economic situation as the “most severe crisis since World War II.” He identified structural problems rather than temporary downturns, citing significant declines in manufacturing sectors such as automotive, mechanical engineering, and chemicals.

Sinn called for a radical policy reversal to “undo 15 years of Merkel” regarding energy, pension, and social policies. He attributed the decline in living standards to high energy prices, the war in Ukraine, low birth rates, and environmental regulations, which he labeled an “attack on the heart” of German industry. He further criticized EU CO2 regulations and labeled supply chain rules as “the work of the devil.” Additionally, he warned that debt-financed growth could jeopardize the nation’s credit rating.