With Lars P. Feld, Christoph M. Schmidt and Volker Wieland, three prominent economists have joined forces here, who have more in common than their common past as "economic wise men" in the Advisory Council for the Assessment of Overall Economic Development.

All three have a distinctive market economy compass.

They are currently united by the concern that the federal government could set the wrong priorities in these times of crisis - for example because it is following the current opinion of the economists, who advise higher taxes.

The German economy is stuck in a deplorable phase of low growth and high inflation.

It is uncertain how deep the recession expected for this winter half-year will be.

The forecasts available mostly suggest a moderate contraction in gross domestic product (GDP) for 2023.

However, the economic momentum in Germany has been slacking for some time.

Economic output was recently at the level before the Corona crisis.

Industrial production was even almost 10 percent below the 2017 level. In an international comparison, Germany has thus fallen further behind.

This is not surprising: the corona pandemic not only had a negative effect on aggregate demand, but also triggered a slump in supply.

Monetary and fiscal policy support for demand alone could not bring about a sustainable economic recovery.

Because the overall economic supply did not catch up - among other things due to supply chain difficulties and shortages of raw materials.

As a result, inflation in the euro area increased significantly as early as 2021.

Inflation has worsened worldwide as a result of the Corona crisis.

Overheating tendencies play an important role because demand – stabilized not least by government measures – exceeds supply, which has been dampened by disruptions.

The expansive fiscal policy and an expansive monetary policy, which ensured favorable financing conditions on the capital markets with the purchase of government bonds, made a major contribution to this.

The energy crisis as a fire accelerator

On top of all this, in February 2022, Russia launched a war of aggression in Ukraine and with it an energy crisis, which acted as an accelerator for inflation and hit the supply side of the German economy particularly hard.

This resulted in inflation that was as high as many euro area member states last experienced in the 1970s.

But even the oil price shock, which was felt to be traumatizing at the time, never led to double-digit price increases in this country thanks to the courageous intervention of the Bundesbank.

So President Putin's war of aggression fueled inflation, but the foundation was laid before that.

The crisis-like escalations hit the German economy in a fundamental structural change.

There is talk everywhere about the transformation of the economy to climate neutrality.

But companies are not only concerned with the requirements of climate protection.

At the same time, the shortage of labor in sub-labor markets threatens to widen and intensify as a result of the unstoppable demographic change.

In addition, digitization is forcing restructuring, and the geostrategic challenges require greater diversification.

Both will not be available without higher costs for companies.