This is no time to celebrate, Kristalina Georgieva warned delegates at the opening of the annual meeting of the International Monetary Fund (IMF) and World Bank in Washington DC. The IMF chief was able to point out that inflation is falling again worldwide. However, growth remains weak, and global public debt has reached a worrying level. This year, it will rise above the 100 trillion dollar level. By 2030, the debt ratio is likely to reach 100% of global GDP. High debt means more interest payments, and this restricts the financial room for manoeuvre for political decisions.

Governments must take Georgieva's warning to rebuild fiscal buffers seriously if they want to remain capable of acting. The same applies to the call to initiate structural reforms and growth-promoting investment. More growth assures more tax revenue. However, growth is weak in Europe in particular, especially in Germany. The result is tight national budgets.

The German government felt the impact of this in Washington DC, of all places, because the results of the autumn tax estimate were published in Germany at the same time as the IMF and World Bank meeting.

The new holes in the federal budget were not wholly unexpected. In an economic downturn, tax estimates always lag behind developments. But the results were worse than feared. In addition to the consolidation items that are still outstanding anyway, the Ampel coalition now faces an even greater task in order to balance the 2025 budget. It is the last regular year of this legislative period, and something of a final balance sheet for the coalition.

The already contentious atmosphere within the government made up of three parties is now at breaking point. The leaders of the coalition are not talking to each other, but only about each other – and not in a good way. Individual initiatives are for political show, but are unsuitable to achieve anything politically.

Federal Finance Minister Christian Lindner (FDP) had to comment on the results of the tax estimate from Washington. The clear message to the coalition partners that the shortfalls should be covered by prioritising spending cuts, and not through additional debt, was not met with much joy, especially by the Green coalition partners.

Vice-Chancellor Robert Habeck (Greens) not only surprised Lindner with his proposal to use a watering can of investment grants via a new „Germany Fund“. He also left the funding question open. The project would be so enormously expensive that it has no chance of being realised. Chancellor Olaf Scholz (SPD) surprised his coalition partners with his plans for a summit with industry representatives and trade unions. The FDP felt so provoked by this that it invited itself to a summit –but focussing on SMEs instead of industry.

Whatever might be decided at one summit or another is irrelevant as long as the coalition government acts the way it does. The SPD, Greens and FDP have lost confidence in the implementation of their plans. Mutual blockade is the dominant strategy. Many things are suffering as a result, such as the urgently needed pension reform.

Trust is a currency that also counts worldwide. The consequences of insecurity are investment attentiveness and weak growth. Russia's war in Ukraine, the burning conflict in the Middle East, and smouldering tensions in Asia between China and Taiwan, are all leaving their mark. Security consultants and crisis analysts are now in demand at international banks, as was evident in Washington.

The rest of the world still has confidence in Germany's ability to generate growth again, and maintain its debt sustainability. Less bureaucracy and regulation, more investment, and a spirit of optimism can make this possible. To achieve this, the coalition partners must deliver – and something other than constant bickering. It would also be their best insurance for the next general election.