An analysis of Michael Hüther’s assessment of the government

The commentary by Michael Hüther, Director of the German Economic Institute, is less a traditional assessment of the government’s performance than a diagnosis of political exhaustion during a phase of profound geopolitical and economic upheaval. His central thesis is that the pressure of problems has rarely been greater, yet this has so far failed to generate the corresponding political resolve. Instead of strategic leadership, Hüther sees a federal government that primarily reacts, mediates and manages crises.

He begins by outlining the context in which the black-red federal government began its work. He describes the international situation as historically fraught: the return of Donald Trump and his aggressive tariff policy, a NATO under pressure, the wars in Ukraine and Iran, and a China that is increasingly asserting its power form the framework of foreign policy. Added to this are European and national problems – economic stagnation, political paralysis in Europe, social pressure from political fringe groups, and the structural challenges of demographics and climate change. Germany, the implicit message suggests, finds itself in a situation of being overwhelmed on multiple fronts.

It is precisely for this reason, Hüther argues, that the government’s political reticence comes as a surprise. He argues that such a massive ‘epochal break’ should actually facilitate political reforms, as the need for action is evident. However, this requires political leadership, strategic clarity and consistent communication – qualities he has so far found lacking in the federal government.

Hüther is particularly critical of the discrepancy between the government’s original aspirations and its actual practice. The CDU-SPD coalition took office promising to govern with greater resolve and capacity for action than previous coalitions. He interprets the special fund and the exemption for defence as initial signs of political courage. Yet this momentum quickly fizzled out. Instead of long-term structural reforms, the coalition has become bogged down in internal conflicts, personnel debates and symbolic politics.

Hüther cites the announced ‘autumn of reforms’ as a prime example, which, in his view, was not followed by any substantial reform agenda. His criticism of the fuel rebate is particularly sharp; he describes it as political theatre – a short-term measure intended to simulate the ability to act without actually solving structural problems. For him, this example epitomises a policy of short-term reactions rather than strategic transformation.

Tax policy also serves as an example for him of the coalition’s inability to reform. The relief for the middle class that is actually needed is being blocked by ideological conflicts over redistribution within the government, particularly by the debate over higher taxes for top earners. Hüther points to what he sees as the minimal fiscal impact of a higher wealth tax: every additional percentage point would yield only around one billion euros in additional revenue. Underlying this is his fundamental criticism that symbolic redistribution policies are crowding out the more urgent debate on growth, investment and incentives for performance.

The commentary develops this into a broader critique of political “petty squabbling”. Hüther argues that the government is neither regaining trust nor providing social direction through piecemeal measures and tactical debates. Particularly noteworthy is his comparison with the former ‘traffic light’ coalition: after a year, the Black-Red coalition is in a worse position than the traffic light coalition was at the same stage – despite initially higher expectations regarding stability and leadership.

Hüther goes on to indirectly outline an agenda of reforms which, in his view, should long since have been the subject of political consensus. These include, in particular, the restructuring of social security, tax incentives for overtime and investment, a more attractive immigration policy for skilled workers, and a fundamental review of state responsibilities and expenditure. Germany, he argues, can no longer afford certain structures and burdens in the long term.

It is striking that Hüther bases his argument less on ideology than on functionality. His focus lies on the state’s capacity to deliver and economic adaptability in a phase of global upheaval. The concept of an ‘epochal break’ serves as the central leitmotif of the entire commentary. He uses it to describe not only geopolitical crises, but a profound change in the overall economic and social framework.

His concluding appeal is therefore directed directly at the political leadership. Citizens, he argues, have long since realised that new challenges cannot be resolved with the tools of past decades. This makes a policy that continues to rely on short-term relief measures and tactical compromises all the more problematic. Hüther calls instead for political leadership, a willingness to take responsibility, and the overcoming of ideological barriers.

The commentary is thus not merely a critique of individual measures taken by the federal government, but an expression of a broader debate regarding the ability of Western democracies to respond strategically to complex transformation crises. Its core message is: the real danger lies less in a lack of awareness of the problems than in the political inability to translate this awareness into consistent action. [DCM]