Marcel Fratzscher, the President of the German Institute for Economic Research (DIW), has suggested that the German government may increase the value-added tax (VAT) from 19 to 21 percent in an effort to address significant fiscal deficits. Fratzscher predicts this move could generate an additional 30 billion euros in revenue, adding pressure on the coalition government to make tough financial decisions.

In his remarks, Fratzscher highlighted a trend where governments often opt for tax increases rather than making more complex budgetary adjustments or cuts. The proposed VAT increase would not only provide immediate financial relief but could also be a part of a broader strategy that involves public sentiment and fiscal discipline.

Other discussions in the political landscape include a planned overhaul of migration policy and deliberations on pensions, particularly concerning retirement at age 70. These topics suggest a shift in government priorities towards long-term economic stability, while also potentially stirring public debate about the implications of higher taxes and changes in social policy.