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The agreement recently presented by Germany’s new three-way coalition government of Social Democrats, Greens and liberals puts climate policy at the top of the agenda. However, what this transformation will essentially look like is being negotiated in Brussels as part of the “Fit for 55” programme and not in Berlin. The measures agreed in Brussels will have a direct impact on climate policy in Germany.

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After Angela Merkel’s 16-year term as chancellor, Germany is doing very well economically, at least if we look at GDP or the unemployment rate. However, this is only half the truth. The need for re-form is enormous. The Economist even wrote about “The mess Merkel leaves behind” and de-nounced the complacency of German politics. Climate change and digitalisation are leading to mas-sive upheavals for which Germany is not sufficiently prepared. The coming government has a lot to do in this regard. With a new composition of political forces, however, it has a unique opportunity to resolve frictions and revitalise markets to make space for innovation and enable the adjustments necessary for change. Let me give you three examples:

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The rapid expansion of renewables has created new challenges for security of supply. Long-term forward contracts could help to address them.

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While it would perhaps be hyperbolic to speak of a triumphal moment in economics, as Canadian economist Joshua Gans does, the success with which many governments have averted the negative economic impacts of the pandemic is cause for commendation, for it could have easily triggered a severe and long-lasting recession. Although the crisis has not yet been fully surmounted and there are numerous lessons to be absorbed, enough time has elapsed to draw some initial conclusions regarding the German crisis response.

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US President Biden’s push to waive patent rights for coronavirus vaccines has provoked a heated debate about ways to improve the vaccine supply, especially in developing countries. But would waiving patent rights actually be an appropriate instrument? Proponents argue that exclusive patent rights are partially responsible for the catastrophic lack of coronavirus vaccine in many countries. By contrast, opponents of a patent protection waiver insist that the vaccine shortage has nothing to do with patents, but has instead resulted from inadequate production capacity.

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The coronavirus pandemic is largely the result of an information problem. If we identified everyone who was infected, it would be easier to prevent viral transmission. Unfortunately, Germany has failed to prioritise the one measure that could close the information gap: testing.

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The new state government has been elected and is now preparing to take office. The structural change in the economy, which has picked up considerable pace as a result of the pandemic, will pose a major challenge for policymakers. Dealing with these challenges will determine whether Germany will be able to ensure prosperity in times of change.

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‘Exponential growth’ should have been the expression of the year 2020. In the mathematics courses of coming decades, the coronavirus is sure to serve as a prime example of exponential growth. Yet the virus is not the only factor in our lives that exhibits an exponential growth function.

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Germany ended its EU Council presidency by launching fireworks one day earlier than expected: on 30 December, the EU and China agreed to the terms of a Comprehensive Agreement on Investment (CAI), thus concluding seven years of negotiations. However, further steps that involve the US are necessary.

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One year ago, the first case of COVID-19 was reported in Wuhan. Since then, more than 65 million people worldwide have been infected with the virus, the death toll has passed 1.5 million, and the global economy is experiencing its biggest slump since the end of World War II.

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