Germany's economic boom is slowing, according to the expert economic council known as the Five Wise Ones.
The council reduced its forecasts for 2018 and 2019 on Wednesday in their annual report on the German economy based on unfavourable external economic conditions and capacity bottlenecks, for example because of the shortage of skilled workers.
The annual report presented to the German government predicts growth in 2018 now of 1.6 per cent, down from the 2.2 per cent predicted last year, slowing further to 1.5 per cent in 2019.
The council encouraged the German government to take account of the increase in tax competitiveness around the world and get rid of the solidarity tax for 90 per cent of taxpayers.
The solidarity surcharge was introduced in the early 1990s mostly to fund the costs of German reunification.
In order to stabilize the eurozone, the European Central Bank (ECB) must successfully bring about the transition to a normal monetary policy, the council said.
"There is a danger that the monetary policy shift will come too late," the council said.
Given the high price dynamic on the German real-estate market, measures to expand supply are called for, it added.
"The rental price control only deals with the symptoms and is not effective. More sensible are reforms of the land transfer tax and a strengthening of housing subsidies. Social housing should be better designed."
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