“An economic advantage can go to waste,” Weidmann said during a speech in Dusseldorf today. “The demographic burden, as well as the catching-up process of other countries could lead to a creeping erosion of the competitiveness of the German economy. Germany is the anchor of stability in the euro area, without whom efforts to stabilize the region would have no credibility.”
German Chancellor Angela Merkel’s Christian Democrats won the largest share of the vote in a federal election on Sept. 22 and she may now face a protracted process of coalition building before a policy agenda can be completed. Weidmann said there’s a “particular need for action” in labor-market policy, immigration, education, infrastructure as well as reform of the federal fiscal transfer structure.
“Flexibility and innovation in the economy have to be increased, sustainable state finances and the system of social security have to be secured,” he said. “To mitigate the aging-induced slowing of the economy, extra drivers of growth have to be mobilized.”
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