German economic advisers raise growth forecast while calling for fiscal reform

Germany's German Council of Economic Experts, known as the "Wirtschaftsweise," has significantly raised its growth forecast for the domestic economy. In its annual report, the panel projects gross domestic product to expand by 1.3 percent this year, marking the strongest growth since 2022, followed by a 1.0 percent increase in 2027. Despite the improved outlook, the advisers cautioned that rising inflation risks remain and urged structural spending cuts alongside potential new revenue measures, such as a defense surcharge, to stabilize public finances.

Meanwhile, corporate and fiscal developments reflect ongoing shifts in the defense and labor sectors. German sensor supplier Hensoldt reported strong revenue expectations alongside a surge in public interest, receiving 100,000 job applications. On the public spending side, Berlin is finalized to acquire a 50 percent stake in defense manufacturer KNDS for €6.6 billion, while the Ministry of Finance has drafted plans to expand federal loan support to the Federal Employment Agency to €8.2 billion next year.

Sources: Der Spiegel, Der Standard, FAZ, Handelsblatt, Tagesschau