Germany urged to cut public holidays to boost war effort
Germans should sacrifice an annual public holiday to fund the nation's rearmament, a top economic institute has proposed.
Europe's largest economy faces a crippling shortage of workers, which is undermining its effort to rebuild its military and embark on a construction programme to revitalise national infrastructure.
Fixing the problem, according to the Ifo Institute, a think tank, must involve working harder, including taking less time off. The number of public holidays varies by state, with Bavaria benefitting from 13 days.
Clemens Fuest, the Ifo president, said Germany cannot rely on extra borrowing and spending by Chancellor Friedrich Merz's new government to transform the economy.
He said: 'The fact that loans are being provided for infrastructure and armaments secures the financing. But where will the labour come from to implement all this?
'Unless more labour is available than before, these spending programmes will increase wages in the defence and construction industry, causing workers to migrate from other sectors.
'Other industrial sectors would have to shrink, and staff would become more scarce in important service sectors such as health and care. Prices would rise everywhere, and many citizens would have to tighten their belts.'
He estimates that the extra day's work would add €8bn (£6.8bn) to the economy's annual output.
Germany would not be the first country to contemplate such a move. Mr Fuest notes that Denmark abolished one of its bank holidays in 2023 to fund a bigger defence budget.
Emmanuel Macron, the French president, has proposed a new school calendar without the traditional long eight-week summer break.
In Germany, almost one third of industries say they are suffering from a shortage of skilled workers, underlining the need for more labour.
Rearmament also threatens to make the shortages worse as more Germans will work for the armed forces instead of in civilian industries.
The economy has barely grown since the pandemic, with output in the first quarter of this year almost identical to the level on the eve of Covid.
Mr Merz's first move – acting under the old parliament, before new members took their seats – was to change the country's constitutional 'debt brake', allowing the new administration to borrow and spend more.
Extra military spending is expected to boost the manufacturing industry, while economists hope that more infrastructure investment will improve long-term growth prospects.
The measures have already had repercussions across Europe. The low-debt German government's borrowing costs are typically used as the benchmark for determining interest rates for other nations, and on to businesses and households, across the eurozone.
As plans for extra borrowing from Berlin have pushed up its borrowing costs in debt markets, so has the impact been felt across the currency area.
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