The Advisory Council for the Assessment of Macroeconomic Development expects the German economy to leave the consequences of the corona pandemic behind at the beginning of 2022.

In the first quarter of 2022, the gross domestic product (GDP) will again reach the pre-crisis level of the fourth quarter of 2019, according to the new report of the committee, which will be presented on Wednesday in Berlin and which is available to the FAZ.

According to the forecast of currently only four instead of five “economic modes”, the German economy will grow by 2.7 percent in the current year.

For the coming year they predict an increase in the gross domestic product of 4.6 percent.

Manfred Schäfers

Business correspondent in Berlin.

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Dietrich Creutzburg

Business correspondent in Berlin.

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Julia Löhr

Business correspondent in Berlin.

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According to the report, the uncertainty about further economic development is significantly greater than in the pre-crisis period. Comprehensive corona restrictions could affect recovery. According to the Expert Council, the inflation rate this year will be an average of 3.1 percent. For the coming year, the committee expects the price level to rise by 2.6 percent. For the labor market, the council initially expects only a slight decline in unemployment to an annual average of 2.633 million for the current year. In the coming year, the number of unemployed is likely to fall to an annual average of 2.367 million.

However, the Council of Economic Experts does not yet see an acute danger that collective bargaining disputes with high wage demands by the unions could become an independent driver of inflation.

“In the last collective bargaining negotiations, the wage increases were rather moderate,” he writes in the report.

When looking ahead, however, he qualifies: "A wage dynamic, possibly driven by higher wage demands as a result of rising consumer prices and increasing job security, is likely to shape wage growth only with a time lag - at the end of the forecast period - due to the duration of collective bargaining."

The debt brake will be met again by 2023 at the latest

On the basis of the current forecasts and against the background of the existing reserves, the Advisory Council believes that the debt brake can be adhered to again after the crisis has been overcome from 2023 at the latest without an exception clause. The Advisory Council is divided on the question of the extent to which federal investments can be increased in order to advance climate protection and digitization. Veronika Grimm and Volker Wieland warn, “First of all, it must be ensured that the financing of public investments is not implemented outside of the debt brake regulations.” Monika Schnitzer and Achim Truger are open to “permanent privilege for future-related expenditure in the budget” or a loan-financed one Investment fund. The central bank urges the five wise men toCommunicate an exit strategy from the expansionary monetary policy in a timely manner.

On Thursday, Olaf Scholz (SPD) will present the new tax estimate in his role as Federal Finance Minister.

According to the calculation of the Federal Ministry of Finance, additional income compared to the May estimate of around 30 billion euros per year is to be expected.

Experience has shown that around 40 percent of the revenue comes from the federal government.