The weakness of the German economy has a global dimension. Germany is currently under international scrutiny, and is expected to once again provide some impetus for growth. In Washington, during the Spring Meeting of the International Monetary Fund (IMF) and World Bank, Federal Finance Minister Christian Lindner (FDP) was publicly confronted with the question of why the German economy is performing poorly. Lindner was adept as an advocate for the country, and succinctly articulated his goals to the global economic leaders gathered in Washington, urging them to do business in Germany again. He offered structural reforms as a solution. And he highlighted Germany's economic resilience. However, it is going to take more than just good advertising slogans.

With the IMF's revised growth forecast of 0.2%, Germany's economy is stagnant in 2024, impeding the recovery of the European economy. Lindner brought supply-side policies with him to Washington. And the IMF is also calling for structural reforms in countries worldwide. His action plan for an economic turnaround largely aligns with the IMF's recommendations for Germany. According to IMF economists, increasing planning capacity in the public sector for implementing government investment, streamlining approval processes for investors and entrepreneurs, and digitalizing administration, can all help revitalise Germany's economy.

Lindner himself adds to this list reforms to the labour market to increase annual working hours, reducing bureaucracy, and undertaking a comprehensive corporate tax reform after 15 years of inaction on tax. In terms of social welfare, he sees the possibility of gaining billions in budget reserves, once people's economic prospects improve, bringing less dependence on state assistance. All of this is intended to enhance Germany's competitiveness, and increase its weak production potential over the next two to three years.

But Lindner's problem is not identifying what Germany lacks with regard to economic initiatives. The problem lies with his coalition partners – the SPD and the Greens – in Berlin. None of these measures have been approved. Talks in the coalition have only just begun for the 2025 budget negotiation. Confidence in the ability of this government to reach agreements is currently low. Only the outcome matters.

There is a disagreement between Lindner and the IMF regarding the financing of increased public investment. He argues that Germany lacks productivity, rather than money for the public sector. He vehemently opposes relaxing debt rules, unlike his coalition partners. The IMF's stance is ambivalent. Concerning financial stability, the Fund is deeply worried about growing government debt internationally, and Germany is singled out for praise for reducing its deficit, and overall debt levels. National debt of 64% of GDP, following the expansive fiscal policy during the Covid-19 pandemic, still exceeds the EU target threshold of 60%, but is edging closer to it. However the IMF's country specialists use these positive numbers to actually argue that there is room for more debt. They urge Germany to triple the level of the debt brake, to finance public investments. Perhaps more consistency from the IMF would be helpful, and might enhance its reputation.

It will take more than just a few brush-ups to boost the German economy. The IMF economists rightly expose the rapid decline in infrastructure investments. In 2022, Germany almost landed at the bottom of the scale for industrialised countries. But the list of tasks set by the IMF cannot be solved with money alone. The coalition has always budgeted ambitiously for investment, but has not been able to spend as much. Funding requirements for defence during geopolitical crises compete with investments such as those for the climate transition. Increasing debt would also add to interest expenses. Structural reforms and sound public finances go hand in hand.