Bavarian Leader Critiques Germany’s 2026 Growth Outlook, Calls for Urgent Structural Reforms

Bavarian Minister of Economic Affairs Hubert Aiwanger has expressed sharp criticism of the German government's forecast for about one percent economic growth in 2026, calling it an "alarm signal" rather than a true recovery. According to Aiwanger, this modest growth projection underscores urgent structural problems such as weak foreign trade, insufficient private investment, and persistent skilled labor shortages.

In response, Aiwanger demands a "genuine structural reform" package to boost Germany’s economic strength. He highlights the need for substantial relief from high costs, stable energy prices, and a dramatic reduction of bureaucracy to support businesses. He specifically condemns government policies like the combustion engine ban, increased inheritance taxes, and additional CO2 pricing as harmful to the business environment.

Despite these challenges, Bavaria remains proactive in supporting innovation, startups, and export initiatives by offering investment incentives and financing programs targeting medium-sized companies.

Meanwhile, the federal coalition government plans to implement a 25 percent cut in bureaucracy, worth €16 billion, alongside other policy changes starting January 1, 2026. These include raising the minimum wage, increasing the CO2 tax on heating fuels, and introducing retirement-related earnings incentives. However, skepticism persists among industry stakeholders about whether these measures sufficiently address the pressing structural constraints.

Aiwanger’s critique reflects a broader concern regarding the fragility of Germany’s growth prospects and the urgent need for comprehensive reforms to secure sustainable economic progress in 2026 and beyond.