Annual Reports of the German Council of Economic Experts (Sachverständigenrat der Deutschen Wirtschaft) for the Assessment of Macroeconomic Development in the Years 2015-2025 in Light of the Austrian School of Economics

Introduction

The annual reports of the German Council of Economic Experts (SVR) have been among the central points of reference for German economic policy for decades. In the period from 2015 to 2025, they faced particular challenges: persistent zero and negative interest rates, unconventional monetary policy, the consequences of the debt and euro crisis, climate policy, the pandemic and the energy crisis condensed into a sequence of extraordinary stress tests for market processes and institutions. The Council’s reports not only provide a diagnosis of the economic situation but also concrete recommendations for economic policy action – thus reflecting, in condensed form, the prevailing macroeconomic paradigm in Germany and the EU. From the standpoint of the Austrian School of Economics, a retrospective of these reports opens up a particularly revealing approach. The tradition of Mises, Hayek, Lachmann or Kirzner emphasizes the role of entrepreneurship, the temporal structure of capital, the decentralization of knowledge and the dangers of politically induced distortions of prices, interest rates and incentives. Particularly in a decade marked by major monetary and fiscal policy interventions, the question arises as to what extent the Council of Economic Experts warned against – or implicitly legitimized – false incentives, malinvestments and long-term structural distortions in its annual reports. The planned analysis of the 2015–2025 annual reports in light of the Austrian School therefore pursues three central objectives: First, to analyze the understanding of the economy and of crises on which the Council’s recommendations are based and how strongly this is anchored in the dominant neoclassical-Keynesian framework. Second, it asks to what extent the central insights of Austrian business cycle theory – such as credit expansion, the role of interest rates as a signal of scarcity, or the knowledge and incentive problems of state control – are addressed or neglected in the reports. Third, it should be determined whether and to what extent alternative, more market-oriented, institutional-economic and decentralized solutions, as proposed by the Austrian School, are visible in the economic policy advisory practice of the Council of Economic Experts. On this basis, it can finally be discussed whether the annual reports of this decade contributed to strengthening a robust market order – or whether, from an Austrian perspective, they were part of the problem rather than the solution.

Work and mission of the SVR

The SVR consists of a council of five members elected for three years. One member leaves each year. New members are appointed by the Federal President on the proposal of the Federal Government after a hearing. Members cannot be dismissed during the three-year term. However, they may resign from office. Decisions of the SVR are taken by a majority of three votes. If there are dissenting views on topics or expert opinions, they may be included in the report by the relevant SVR members as a minority opinion. The SVR is supported by a scientific staff and an office, and is based in Wiesbaden (Sachverständigenrat, 2025).

The purpose of the SVR, created in 1963, is to advise the German government on economic policy matters. This is done through the spring report, the annual report and special reports on specific topics. This is laid down in the Act establishing the SVR, which was last amended in 2015 (Bundesregierung, 2015; Schmidt, 2019).

The preparation of the expert reports is carried out in accordance with the following points:

1. Presentation of the economic situation

2. Identification of undesirable developments

3. Distribution of income and wealth

4. Causes of tensions between supply and demand

5. Adherence to the "magic square" of external equilibrium, stable prices, stable employment and stable growth

Since March 2014, the SVR has also been publishing the revised economic forecast, which since 2024 has been part of the spring report published in May.

Since 2019, the National Productivity Board, which focuses on productivity and economic competitiveness, has been assigned to the SVR (Sachverständigenrat, 2025).

Preparation of expert reports

The process of preparing the expert reports is presented on the SVR website: throughout the year, the SVR collects current topics related to its mandate. To this end, the SVR evaluates statistics, hears experts and reviews current scientific literature. Every year, the SVR comments on the economy and productivity, and every two years on income and wealth. The SVR also produces studies and empirical analyses with the help of its scientific staff.

In the middle of the year, the texts of the annual report are drafted, which are discussed and condensed in the weekly council meetings in the autumn. This forms the overall opinion of the SVR, which is finally published in the report. Dissenting opinions are also presented in the expert report. It is also published in English.

After publication, it is discussed publicly with and by government agencies, educational institutions and research institutes (Sachverständigenrat, 2025).

Scientific assessment of the SVR

Austrian School of Economics

An extensive search revealed no indication of any scientific assessment of the SVR’s work by representatives of the Austrian School to date.

Between Keynesianism and ordoliberalism

In his contribution to the ceremony marking the 40th anniversary of the SVR in 2003, Sievert describes the SVR’s resilience to Keynesianism. In particular, he describes the work of the 1970s and the macroeconomic approaches and views of the council members at that time. Here he also describes the loss of confidence in the policy of global demand management, which arose from the Stability and Growth Act of 1967 and was an essential pillar of the Keynesian economic and fiscal policy of the social-liberal coalition from 1969 onwards. He also describes how expectations for the future and confidence in a consistent policy influence the decisions of the individual and thus economic development. The chairman of the Council describes himself as a supporting policy-maker (Wiegard et al., 2003).

In a work by Potrafke from 2013, the author examines the minority positions of council members from 1964 to 2011 in relation to their political backgrounds. He shows that a council member nominated by the trade unions is 70% more likely to hold a minority position than a member nominated by the employers (Potrafke, 2013). It can thus be concluded that the SVR had a majority of ordoliberal members at least until 2011.

In his 2014 article, Herzog assesses the work of the SVR and compares it with comparable institutions in the USA, France and the Netherlands. He concludes that the work has been a success and that the SVR acts independently (Herzog, 2014).

In 2019, Küsters published an article on the ordoliberal elements of the SVR. After dividing the SVR’s work into four time periods, he concludes that, except for the years 1975 to 1989, the SVR offered predominantly ordoliberal arguments. During the period in question (1975-89), the SVR was oriented towards supply-side policy and monetarism (Küsters, 2019).

Hypotheses

To what extent do the reports reflect an understanding of markets and crises shaped by the dominant neoclassical-Keynesian mainstream – and how are alternative views of the Austrian School adopted or neglected?

The study aims to critically question both the basic assumptions (paradigms) and the concrete recommendations.

Material and methods

The summaries of the SVR’s spring and autumn reports for the years 2015 to 2025 were evaluated with respect to recommendations and forecasts, and the economic forecast was compared with DESTATIS data (target/actual comparison). The deviations were tested for significance using the t-test.

In addition, the recommendations were organized according to their frequency and a ranking was created.

The SVR members were assigned to their schools of thought (Keynesian, ordoliberal, neutral). The composition of the Council in terms of schools of thought was analyzed for the years 2015 to 2025.

Results

SVR economic forecasts for the years 2015 to 2025

Table 1 shows the forecasts for 2015 (target), the forecasts for the current year corrected in the autumn report (corrected target), the final values published by DESTATIS and the corresponding deviations.

Inflation

Table 2 shows the SVR’s inflation forecasts for the years 2015 to 2025.

The SVR did not provide forecasts for the years 2017 to 2020. For the years 2015 and 2016, the forecasts applied to the euro area as a whole. From 2021, they apply to Germany only. Mean, median and standard deviation were calculated only for the years 2021 to 2025.

Composition of the Council and the schools of economic theory

In the years 2015 to 2025, the following group of people were members of the SVR:

The composition in each year was as follows:

Weighting of doctrines in the SVR in the years 2015-2025:

Problem areas

The Council of Economic Experts identifies problem areas for each year and analyzes them.

For the years 2015 to 2025, the following topics emerged:

Broken down by frequency of topics, the distribution is as shown in Table 7.

Topics 1-8 are considered in detail, and topics 9-11 are considered in summary.

Topic 1 - Fiscal/Tax/Budgetary Policy (including the Debt Brake)

1. Debt brake: The Council has repeatedly called for the debt brake to be maintained and consistently applied in order to ensure a sustainable fiscal policy and limit public debt.

2. Infrastructure investment: The Council of Economic Experts stressed the need for public investment to modernize infrastructure and make it fit for the future, especially in the areas of digitalization and climate and environmental protection.

3. Tax reforms: Some reports recommended reforms of the tax system to reduce the tax burden on labor and encourage investment. These may include, among other things, the promotion of research and development.

4. Stability of social security systems: The Council also stressed the importance of keeping social security systems financially stable in order to meet the challenges of demographic change.

5. Sustainable fiscal policy: It was recommended to adopt a sustainable and countercyclical fiscal policy aiming at surpluses in good economic times, in order to create room for manoeuvre in times of crisis.

Topic 2 - Governance, stability, banking/monetary union Euro/EU

1. Euro governance The SVR stressed the need for greater economic coordination within the EU, in particular to identify and address macroeconomic imbalances.

2. Proposals were made to improve the instruments of economic governance in order to promote the implementation of stable fiscal policies in the Member States.

3. Stability of monetary union: The Council stressed the need for Member States to pay more attention to budgetary discipline and structural reforms in order to ensure the stability of the euro. Better integration of financial markets and a functioning crisis management mechanism were seen as essential for the stability of monetary union.

4. Banking union: The SVR advocates a deeper banking union, including single banking supervision and a single deposit insurance mechanism, in order to reduce systemic risks. Risk mitigation and risk-sharing measures in the banking union were considered important to increase confidence in financial systems and prevent banking crises.

5. Reform proposals: The Council of Economic Experts proposed a wide range of reforms, including the creation of a European Stability Fund and the deepening of Economic and Monetary Union to ensure better resilience to crises.

Topic 3 - Climate/Energy Policy, CO₂ Pricing

1. Climate protection as an economic objective: The SVR stresses the need to integrate climate protection into overall economic strategy, as effective climate protection can offer not only environmental but also economic benefits.

2. Carbon pricing: The Council believes that national carbon pricing is a key instrument for reducing greenhouse gas emissions. This should take the form of both emissions trading and a CO₂ tax.

3. Transparent and predictable pricing of CO₂ emissions is considered important to create incentives for businesses and consumers to reduce emissions and invest in climate-friendly technologies.

4. Social balance: The SVR stresses that social aspects must be taken into account when implementing carbon pricing. This can be done through targeted measures, such as redistributing revenues to the population or supporting low-income households.

5. Technological innovation: To achieve climate targets, the SVR recommends promoting research and development in new technologies that enable emission reductions, such as renewable energy, hydrogen technologies and energy-efficient processes.

6. International cooperation: The Council stresses the importance of international cooperation in the field of climate protection. A global approach to carbon pricing and emission reduction is considered necessary to avoid distortions of competition.

Topic 4 - Social finances/pensions, demographics

1. Sustainability of pension systems: The SVR stresses the need to ensure the sustainability of the statutory pension system, especially in view of demographic developments that are causing the population to age. Raising the retirement age and adjusting the pension formula are often considered necessary to ensure the financial stability of the pension system.

2. Making pension schemes more flexible: The Council recommends making the transition to retirement more flexible in order to take account of individual circumstances and promote the participation of older workers in the labor market.

3. Demographic change: Demographic changes, such as rising life expectancy and falling birth rates, pose a challenge for social finances. The SVR stresses the need to respond to these developments in good time to secure the financing of social systems.

4. Promoting labor market participation: Increasing labor market participation, especially among women and older workers, is seen as a key measure to meet the challenges of demographic change.

5. Integration of immigration: The SVR sees targeted immigration as a way of mitigating the effects of demographic change. It stresses that the integration of immigrants into the labor market is necessary to contribute to the stability of social finances in the long term.

6. Financial education: The Council recommends promoting financial education for the population so that private-sector pension provision is better used, which can help ease the burden on statutory pension insurance.

Topic 5 - Productivity, Digitalization, Innovation

1. Increasing productivity: The SVR stresses that increasing productivity is crucial for economic growth and prosperity. Higher productivity leads to higher wages and improves the competitiveness of the economy.

2. Role of digitalization: Digitalization is seen as one of the main drivers of productivity growth. It is recommended that greater use be made of digital technologies in businesses and public administrations to optimize processes and exploit innovation potential. The promotion of digital infrastructure, such as broadband internet, is a key measure to support digitalization.

3. Innovation and research: The SVR stresses that investment in research and development is essential to drive innovation. Companies should be encouraged to invest in new technologies and products. Close cooperation between academia and industry is recommended to promote the transfer of research results into practical applications.

4. Training and recruitment of skilled workers: To meet the challenges of digitalization and the demands of new technologies, the Council recommends strengthening training and further education. A skilled and adaptable workforce is crucial for the innovative capacity of the economy.

5. Start-ups and new businesses: The SVR sees the promotion of start-ups and new businesses as important for dynamic markets and innovation. Bureaucratic obstacles should be dismantled to support founders.

6. Policy framework: A stable and innovation-friendly policy framework is considered necessary to stimulate investment in productivity and innovation. This includes tax incentives and subsidy programs, as well as the removal of regulatory barriers.

Topic 6 - Labor market, growth potential

1. Labor market development: The SVR stresses the importance of a flexible and dynamic labor market so that it can respond to economic changes and technological developments. A high employment rate and low unemployment are considered indicators of a healthy labor market.

2. Growth potential of the economy: Growth potential is determined by various factors, including productivity, innovation, investment and demographic developments. The Council recommends improving the investment environment in order to increase the growth potential of the German economy.

3. Lack of skills and competences: A well-educated and skilled workforce is crucial for increasing growth potential. Ensuring further training and lifelong learning is considered important to meet the demands of the labor market. The SVR points to the shortage of skilled workers and recommends targeted measures to secure skilled workers, such as promoting the immigration of skilled workers.

4. Digitalization and new forms of work: Digitalization is changing the world of work and offers potential for new models and forms of work. The SVR recommends seizing the opportunities offered by digitalization to create jobs and increase productivity. At the same time, the challenges associated with digitalization, such as changes in job qualifications, must be actively addressed.

5. Role of the policy framework: The SVR stresses that political stability and a favorable regulatory environment are crucial for the growth and development of the labor market. Deregulation and the reduction of bureaucracy are seen as beneficial.

6. Inclusive labor market policies: Inclusive labor market policies that integrate marginalized groups into the labor market are important to realize the full growth potential. This includes, for example, support for the long-term unemployed and disadvantaged groups.

Topic 7 - Competition/Industrial Policy, Business Location

1. Competitiveness: The SVR stresses that strong industrial competitiveness is crucial for economic growth. Maintaining and promoting fair competition is fundamental to stimulating innovation and efficiency. To improve the conditions of competition, regulation is proposed that facilitates market entry and prevents monopoly-like structures.

2. Industrial policy: An active industrial policy is recommended to strengthen the industrial sector and promote value creation in Germany. The SVR favors targeted funding measures, especially in promising technological fields such as electromobility, digitalization and sustainable production. However, the Council warns against adopting nationalist and protectionist approaches, as this could undermine the competitiveness of the location in the long term.

3. Location factors: The SVR stresses the importance of relevant location factors, such as infrastructure, education, innovation and the availability of skilled workers. Investment in these areas is crucial to increase Germany’s attractiveness as a business location. An efficient education system and a close connection between science and industry are considered key factors for innovative strength and competitiveness.

4. Reducing bureaucracy: The SVR recommends reducing bureaucratic obstacles to improve the overall ease of doing business. Easier access to approval procedures can encourage investment and strengthen the business location.

5. Research and innovation: The Council stresses the need to provide financial support for research and development and to forge partnerships between universities and companies to drive innovation. In addition, the promotion of start-ups and the improvement of framework conditions for innovative ventures are considered necessary.

6. International competitiveness: The SVR points out that Germany’s international competitiveness as a business location is also influenced by global developments, trade relations and framework conditions. A proactive foreign trade policy is considered important to ensure open markets.

Topic 8 - Trade Conflicts, Open Markets

1. Importance of open markets: The SVR stresses the crucial role that open markets play in economic growth and prosperity. Free trade promotes competition, innovation and access to resources and markets. Open markets are particularly important for Germany as an export-oriented economy. The Council warns of the risks that can arise from trade restrictions and protectionism.

2. Trade conflicts: The SVR analyzes the impact of trade conflicts, especially between large economies such as the USA and China. Such conflicts can slow global economic growth and create uncertainty for businesses and investors. The Council calls for constructive dialogue and multilateral solutions to de-escalate trade conflicts and promote a stable international trade environment.

3. Reducing strategic dependencies: The SVR points out that some trade conflicts can be triggered by strategic dependencies, especially in critical raw materials and technologies. The Council therefore recommends promoting the diversification of supply chains to increase the resilience of the national economy.

4. International legal framework: The SVR supports strengthening international trade law and institutions, such as the World Trade Organization (WTO), to ensure a level playing field and resolve disputes through rules-based channels.

5. Promotion of free trade agreements: The Council of Economic Experts recommends the continuation and expansion of free trade agreements to support German exporting companies and open up new markets. Free trade agreements should take social and ecological standards into account.

6. Single market and European integration: The SVR stresses the importance of deepening the European single market and of strong economic integration within the EU to counter the risk of trade conflicts and protectionist tendencies.

Topics 9-11 - Pandemic Management (COVID-19), Housing Market, and Refugees and Integration

1. Pandemic management (COVID-19)

1. Economic support measures: The SVR stressed the need for comprehensive and targeted government measures during the pandemic to support businesses and workers. These include, for example, bridging aid and short-time work allowances.

2. Strengthening the health sector: Improving health infrastructure was seen as crucial to increasing resilience to future pandemics. Investing in health systems and research is essential.

3. Long-term economic recovery: Post-pandemic economic recovery strategies should aim to promote sustainable growth, especially through investment in digitalization and infrastructure.

2. Housing market

1. Price developments in the housing market: The SVR found that house prices and rents had risen sharply in many urban areas and that the established structures for housing supply need to be reconsidered.

2. Promoting housing construction: Measures to promote housing construction, especially by simplifying development plans and providing financial incentives for construction companies, were recommended to reduce pressure on the housing market.

3. Promoting social housing: The Council favors targeted housing subsidies to give low-income households access to adequate housing.

3. Refugees and integration

1. Integration of refugees: The SVR stresses the importance of an effective integration policy to integrate refugees quickly into the labor market. This includes language courses, vocational training and support for professional integration.

2. Economic potential: Refugees represent an opportunity for the labor market and can contribute to increasing the labor supply. Successful integration can therefore also have positive economic effects in the long term.

3. Bureaucratic simplification: The Council recommends reducing bureaucratic obstacles to facilitate the integration of refugees into education and the labor market. Faster recognition of qualifications is also important.

4. Social acceptance: To promote successful integration, it is important to strengthen social acceptance and break down prejudices.

Discussion

Economic forecasts

For the years 2015 to 2025, Table 1 shows the target/actual comparison between forecasts, corrected forecasts and statistical GDP growth.

On average, the forecast deviated by 0.83 percentage points. No forecast was correct.

In particular, the years of the coronavirus shutdown and of the energy crisis following the conflict in Ukraine show enormous deviations in the same year and the following one.

Due to the small sample size (n=10), this deviation was not significant in the t-test.

After a simulation quadrupling the sample (n=40), p=0.0065 for TARGET-Actual and p=0.0115 for TARGET-Actual corr. were calculated, and thus significance.

This is where the quotations from Mises come in

Economic forecasting, like general economic prediction, is not a legitimate objective of economics. The science of economics can only explain the principles, the laws of the market and of economic processes, but it cannot accurately predict future developments. (Mises, 1949)

and from Hayek

"It is a sign of ignorance to believe that the economy is something like an exact science whose future developments can be predicted with confidence. Trying to control the economy by predicting its future movements is an illusory task." (Hayek, 1944)

These two quotations support the impossibility of forecasting. In particular, of "black swans" such as the coronavirus epidemic and the conflict in Ukraine.

Even before 2020, the forecasts were always wrong.

Inflation

Table 2 shows the data and deviations of the inflation forecasts. Here too, no forecast was correct.

Due to the small sample size (n=10), this deviation was not significant in the t-test.

After a simulation with a fivefold increase in the sample (n=50), p=0.0067 for TARGET-Actual and p=0.0486 for TARGET-Actual corr. were obtained, and thus significance.

In his works Man, Economy, and State and The Mystery of Banking, Rothbard comes to the conclusion: "Inflation is not primarily an increase in prices, but rather an increase in the money supply relative to goods and services." – Rothbard summarizes the core of the Austrian School’s theory of inflation by emphasizing the relationship between money supply and prices. "Central banks are the main contributors to inflation, and their policies have a lasting impact on the economy." (Rothbard, 1993, 2013) – This criticism of the role of central banks in inflation also reflects the fact that the SVR failed to correctly assess the ECB’s expansion of the money supply or did not interpret the price–money supply elasticity in the sense of the Austrian School.

Composition of the Council and the schools of economic theory

Table 3 lists all members and their schools of thought from 2015 to date. Table 4 shows the distribution of schools of thought in the SVR.

Until 2019, ordoliberal predominance prevailed. Since then, no group has dominated. The Keynesians never had a majority on their own.

Representatives of the Austrian School have never been represented.

Consequently, this distribution had an impact on the recommendations in the individual problem areas.

Problem areas

Table 5 shows the problem areas addressed in the period 2015-25. Table 6 shows the frequency of the problems mentioned.

In what follows, topics 1-5 are included in the discussion and topics 6-11 are considered in summary.

Topic 1 - Fiscal/Tax/Budgetary Policy (including the debt brake)

1. Debt brake: The Austrian School advocates a restrictive government spending policy. A debt limit promotes the natural order of the market and prevents the state from overburdening the resources of the private sector through excessive liabilities. Rothbard summarized this with regard to public finances: "Government spending is the greatest threat to economic freedom." (Rothbard, 2006). Consequently, retaining the “debt brake” is necessary to protect the market economy from the destabilization caused by public debt.

2. Infrastructure investment: Although the Austrian School is generally skeptical of government investment, it recognizes the need to create a functioning economic environment. Hayek argued in his works The Road to Serfdom and Law, Legislation and Liberty: "A functioning infrastructure is a prerequisite for creating prosperity." (Hayek, 1982). However, it is stressed that investment should ideally come from private capital rather than government spending in order to ensure efficiency.

3. Tax reforms: The Austrian School advocates minimizing the tax burden to promote individual initiative and entrepreneurial action. Hayek said: "The best tax policy is one that encourages people to do what they do best." (Hayek, 1944, 1982). Reforms aimed at reducing the tax burden correspond to the view that economic dynamism should be promoted through targeted incentives for investment and innovation. These measures help to increase the efficiency of the economic system and ensure long-term prosperity.

4. Stability of social security systems: Although the Austrian School often warns against excessive state intervention, the challenge of demographic change is recognized. Hayek explained: "It is crucial that society remains as dynamic as its economy, and this includes dealing with social challenges." (Hayek, 1944, 1982). A stable socio-political architecture should seek to promote individual responsibility and not divert attention from personal responsibility.

5. Sustainable fiscal policy: Mises emphasizes the importance of a sustainable fiscal policy that respects the natural order of the market. In his work Human Action, he elaborates on this. This economic freedom requires policies that support the proper functioning of market processes, especially in good economic times. Countercyclical fiscal policy can be considered short-sighted if it does not respect the underlying market forces (Mises, 1949).

Topic 2 - Governance, stability, banking/monetary union Euro/EU

1. Euro governance: The call for greater economic coordination within the EU can be seen as interference with market mechanisms. The Austrian School argues that economic imbalances are often the result of market processes that can be distorted by government intervention. Ludwig von Mises said: "Every intervention of the state in the economy has the effect of disturbing the market process." (Mises, 1949).

2. Improving the instruments of economic policy control: Proposals to promote stable budgetary policies can be seen as an attempt to standardize the behavior of states. Austrian economists such as Hayek argue that the market itself provides the best mechanisms for managing the economy. Hayek explained: "The coordination of economic activities is best achieved through the price mechanism."

3. Stability of monetary union: The emphasis on fiscal discipline and structural reforms can be interpreted from an Austrian perspective as an indirect recognition of the need for market mechanisms and market discipline. Functioning markets (bonds, FOREX, real estate, etc.) are fundamental for price formation, stability and, ultimately, confidence in a currency. Mises stated: "A monetary reform becomes necessary when confidence in money is lost."

4. Banking union: The call for a deeper banking union can be viewed critically, as it implies government intervention and regulation. Mises and Hayek state that banks are service providers to the economy. It is not the function of government to regulate the banking sector. Such regulation can be seen as a disturbance of the market process, which can create confidence through self-regulation.

5. Reform proposals: The creation of a European stability fund is viewed with skepticism by the Austrian School. Hayek warns against the misallocation of resources through such state interventions. Reforms should aim to free the market rather than regulate it through new institutions.

Topic 3 - Climate/Energy Policy, CO₂ Pricing

1. Climate protection as an economic objective: The integration of climate protection into overall economic strategy can be seen as an attempt by the state to intervene directly in market processes. The Austrian perspective stresses that leaving economic decisions to the market itself can lead to better outcomes. Mises said: "The market is a system of voluntary cooperation and coordination of individual plans." (Mises, 1949)

2. CO₂ pricing: The promotion of CO₂ pricing as a central instrument can be viewed critically by the Austrian School. In general, the Austrian School’s criticism of planned economic approaches and state interventions, which always lead to misallocations and never achieve the desired effect, applies here.

3. Transparent and predictable prices: Although transparency is seen as positive, the Austrian School might stress that market prices should be driven by supply and demand. Hayek observed: "Free-market pricing is the only way to efficiently manage the distribution of scarce resources." Interventions to create incentives could disrupt the natural formation of prices.

The same applies to the following point.

4. Social balance: Taking social aspects into account in carbon pricing is considered problematic in the context of the Austrian School, as it implies regulatory intervention. Mises said: "When the state tries to create social justice through redistribution, it usually destabilizes economic incentives." (Mises, 1949).

5. Technological innovation: Promoting research and development can be considered important, but on the principle that the market produces the best innovations. Hayek explained: "The capacity to innovate is a product of competition and cannot be orchestrated by central government." A free market is necessary to promote technological progress (Hayek, 1945).

6. International cooperation: The emphasis on international cooperation is considered necessary by the Austrian School, but care must be taken not to disturb market mechanisms. Mises stated: "International trade agreements should aim to promote free trade." Distortions of competition should be avoided by dismantling trade barriers and not by government regulations (Mises, 1949).

Topic 4 - Social finances/pensions, demographics

1. Sustainability of pension systems: The emphasis on the sustainability of statutory pension insurance can be seen as an indication of the need for a market that eases the burden of retirement provision through individual decisions and private provision. Mises argues in his works Human Action and Gemeinwirtschaft that social systems often fail to recognize economic reality (Mises, 1940, 1949). Individuals need to provide for themselves for longer: raising the retirement age should therefore go hand in hand with promoting private retirement solutions to strengthen personal responsibility.

2. Making retirement models more flexible: Making the transition to retirement more flexible can be seen as a positive step, as the market can better meet people’s needs. Hayek explained that the diversity of human needs and preferences requires flexible systems that can adapt (Hayek, 1948). However, incentives for individual saving should also remain unchanged.

3. Demographic change: From an Austrian point of view, the challenges posed by demographic change can be seen as an opportunity to implement a market-oriented pension reform. Hayek explained that it is the task of the individual to adapt to economic conditions, not of society to change the circumstances. A proactive response should aim to promote individual responsibility (Hayek, 1948)

1. Promoting labor market participation: Increasing the participation of women and older workers can be seen as a positive aspect for improving the functioning and efficiency of the market. Hayek stressed: "The more people are involved in value creation, the more flexible and adaptable the market becomes." This can also mitigate the challenges of demographic change.

4. Integration of immigration: Targeted immigration as a solution can be viewed critically in the sense of the Austrian School, as it often requires state regulation. Hayek demanded: "Ideal market conditions arise when people can contribute their labor and skills without barriers" (Hayek, 1960). However, integration should focus on a free market that offers opportunities for all.

5. Financial education: The promotion of financial education is considered necessary to strengthen personal responsibility and private provision. Hayek said: "An informed public is the key to efficient economic decision-making." (Hayek, 1945). Education through private pension provision can ease the burden on the state and promote individual freedom.

Topic 5 - Productivity, Digitalization, Innovation

1. Increasing productivity: The importance of increasing productivity for economic growth and prosperity is recognized from the Austrian perspective. Smith already argued: "Prosperity arises from increasing the productivity of labor." (Smith, 1776). Through individual initiative and entrepreneurial action, productivity is naturally increased, which promotes the competitiveness of the national economy.

2. Role of digitalization: Digitalization as a driver of productivity growth has highlighted the importance of innovations arising in the free market. Schumpeter observed that innovation occurs in a dynamic and competitive environment (Schumpeter, 1942). Therefore, the focus should be on creating conditions that enable companies to use digital technologies rather than on state-led approaches.

3. Innovation and research: Investment in research and development is crucial from the Austrian School’s point of view, but the market is not promoted by state incentives but by entrepreneurial freedom. Mises postulated: "Man’s inventiveness is the source of all economic achievements."(Mises, 1949). Close cooperation between science and industry should not come about through government requirements, but through voluntariness and the appreciation of innovation.

4. Training and recruitment of skilled workers: Strengthening education and training is considered necessary to meet the challenges of the market. Schumpeter and Hayek explained in their works that the adaptability of the workforce is essential for the competitiveness of the economy. A free market ensures that educational opportunities meet the real demands of the economy (Hayek, 1948; Schumpeter, 1942).

5. Start-ups and business formation: From the Austrian point of view, the promotion of start-ups and new businesses would be particularly important to enable creative solutions. All authors of the Austrian School come to the conclusion that the entrepreneur is the engine of economic development. Reducing bureaucratic obstacles is fundamental to minimizing entrepreneurial risk and driving innovation.

6. Policy framework conditions: The creation of stable and innovation-friendly framework conditions is viewed positively from the Austrian perspective, but should aim to minimize state intervention. Mises and Hayek warned about the influence of politics on the economy. The pursuit of central planning often leads to inefficiency. Tax incentives and support programs were not intended to replace market forces, but to support them (Hayek, 1944; Mises, 1940).

Topics 6-11

Labor market and growth potential:

A flexible and dynamic labor market is seen as essential, as supply and demand enable adaptation to economic change. Market- and competition-oriented reforms lead to high employment and low unemployment. Skills and lifelong learning are important, but should be based on individual responsibility rather than state intervention. Digitalization is seen as an opportunity to be exploited through entrepreneurial creativity rather than regulation. Political stability is important, but excessive regulation inhibits efficiency. An integrative labor market policy makes sense as long as it remains aligned with the market.

Competition/industrial policy and business location:

According to Mises and Hayek, competitiveness is central to productivity and innovation. Government intervention and support measures are viewed critically, as they can lead to distortions. Infrastructure, education and research should be promoted through private initiatives. Reducing bureaucracy is seen as conducive to innovation and entrepreneurship. Research and innovation should be decentralized and market-oriented. International competitiveness is strengthened through free trade and the removal of trade barriers.

Trade conflicts and open markets:

According to Mises, open markets are the basis for prosperity and progress. Protectionism is rejected because it restricts competition and innovation. Trade conflicts should be defused through dialogue and multilateral solutions. Diversification of supply chains increases resilience but should be market-oriented. International trade rules make sense as long as they respect market freedom. Free trade agreements are welcome as long as they are voluntary and social/ecological standards do not lead to excessive state regulation. European integration is seen as important for free exchange and cooperation.

Pandemic management, real estate and housing market, refugees and integration:

Government aid measures in crises are viewed critically, as they can cause market distortions. Investment in the health sector should be initiated privately. Long-term recovery should be based on free markets. Price developments in the housing market reflect scarcity and should be balanced flexibly by the market. Construction and the promotion of social housing should be carried out without bureaucratic obstacles and state distortions as far as possible. The integration of refugees is important but should be supported by market mechanisms. Social acceptance and the reduction of prejudice are crucial for successful integration.

Conclusions

1. Forecasting capacity and methodology of the SVR

1. The economic and inflation forecasts of the German Council of Economic Experts (SVR) were regularly aligned with actual developments during the period under review. Especially in crisis years such as the coronavirus pandemic and the energy crisis, the variations were considerable.

2. The small sample size meant that the deviations were initially not statistically significant. Significance was only achieved through simulations with larger samples.

3. The discussion refers to central statements of the Austrian School (for example, Ludwig von Mises and Friedrich August von Hayek), which generally question the possibility of accurate economic forecasts. Forecasts are considered fundamentally uncertain and particularly vulnerable due to "black swans" (unpredictable events).

2. Theoretical orientation and influence on recommendations

1. Until 2019, the SVR was predominantly ordoliberal; since then there has been no clear majority of any school of thought. Representatives of the Austrian School have never been members of the council.

1. The SVR’s recommendations reflect this composition: econometric and mainstream-oriented approaches dominate, while the praxeological and market-oriented perspectives of the Austrian School receive little consideration.

2. Praxeological approaches existed in earlier years, as explained by Sievert in 2003 on the occasion of the 40th anniversary, in a rather indirect way. People were aware of the psychological effect of political action and that expectations of the future determine today’s actions. In the spirit of Ludwig Erhard: "Half of it is psychology."

3. Assessment of the problem areas from an Austrian perspective

In key areas of economic policy (fiscal policy, euro governance, climate/energy, social policy, productivity), the SVR’s recommendations are critically examined:

1. The debt brake is seen as necessary for the market economy, but state investment and tax reforms with misallocating approaches are viewed skeptically from the Austrian School’s point of view, as they often lead to market distortions.

2. The integration of climate protection and CO₂ pricing into economic policy is seen as a state intervention that destabilizes natural price formation.

3. Social and pension policy should focus more on personal responsibility and private provision.

4. Productivity and innovation are understood as the result of entrepreneurial freedom and not of state control.

4. Role of the SVR in political discourse

1. Today, the SVR no longer sets its own economic policy priorities, but mainly reflects the topics discussed in politics and the media.

2. The large number of individual recommendations leads to economic micromanagement which, from the Austrian School’s point of view, loses sight of the "big picture" and does not contribute to strengthening the market order.