Germany’s economic advisors demand sweeping cuts to social spending as budget crisis deepens
Germany’s Council of Economic Experts (*Wirtschaftsweisen*) warns that soaring social security contributions—projected to reach nearly 50% of wages by 2027—threaten economic growth and urgently require structural reforms. In their spring report, the advisors propose radical austerity measures, including slashing hospital funding, capping pharmaceutical subsidies, and overhauling long-term care financing, to curb the federal deficit .
The federal government’s draft 2026 budget, leaked this week, targets €20 billion in cuts across social programs. Key reductions include:
Critics warn the cuts will exacerbate existing crises. Vienna’s AKH hospital estimates 250 physician positions could be lost, while universities—already facing a €1.5 billion shortfall—plan protests demanding €18 billion in additional funding . ORF Director General Kathrin Thurnher called the government’s plan to cut €80–90 million in public broadcasting subsidies "a threat to the foundations" of independent media .
The *Wirtschaftsweisen* argue the reforms are necessary to prevent a "social state spiral," where rising contributions stifle wages and investment. Their report highlights demographic pressures, with baby boomers entering retirement, as a key driver of unsustainable costs. Proposed solutions include means-testing care benefits and expanding private savings models .
Chancellor Olaf Scholz’s coalition remains divided over the scope of cuts. While the SPD resists reductions to social welfare, the FDP and Greens push for broader subsidy reforms, including a review of €80 billion in annual tax breaks and industry incentives . A final budget vote is expected in September, with unions and civil society groups planning nationwide protests in June.