Germany's economic advisors slash growth forecast as Merz hosts crisis summit

Germany's Council of Economic Experts has halved its growth forecast for the country in its spring report. The announcement comes as Chancellor Friedrich Merz hosts a high-stakes luncheon at the Chancellery, where key ministers face intense pressure over economic reform.

Germany's panel of top economic advisors, known as the Wirtschaftsweisen or Council of Economic Experts, has dramatically cut its growth forecast for the German economy in its spring assessment, halving the previously projected figure. The announcement marks yet another blow for Friedrich Merz, who took office as Chancellor only recently and already faces mounting economic headwinds.

Following the release of the spring report, Merz hosted a working lunch at the Chancellery bringing together key figures from his government. Among those present were Labour Minister Bärbel Bas and Finance Minister Lars Klingbeil, both of whom face difficult questions about where reform is possible and how Germany can return to sustainable economic growth.

Bas is under significant pressure to advance structural labour market reforms, even as social concerns mount across the country. Klingbeil, meanwhile, is reportedly searching for any remaining fiscal room for manoeuvre within Germany's tight budgetary constraints, with debt limits and sluggish revenues narrowing his options considerably.

Also present at the gathering, according to reports, was Rustem Umerov, Ukraine's top negotiator, adding a notable geopolitical dimension to what was already a high-pressure diplomatic and economic summit at the heart of the German government. The combination of domestic economic strain and international security concerns underscores the complexity of the challenges now facing Berlin.

The halving of Germany's growth outlook is a stark signal of the structural difficulties still plaguing Europe's largest economy, from weak industrial output to sluggish consumer demand. Analysts are watching closely to see what concrete policy responses, if any, emerge from the Chancellery following Wednesday's discussions.