A poll by economists conducted last week estimated that the largest economy in Europe could increase its financial burden from the current level 63 percent of GDP to 86 percent of GDP for the next decade without negative consequences. 28 economists’ answers imply a financial space of 1.9 tH.
“Germany has great financial potential,” said Marcella Messori, Professor of the European University Institute, adding that the space to create greater debt should be used to push Germany and the broad European economy to “high-tech sectors and effective green transition.”
The conclusions came after the Merz, the head of the right-wing Central Christian Democrats, and his likely coalition partner, the Social Democrats, presented plans to increase the creaking infrastructure of the country and increase the cost of defense costs.
Economists believe that this is a necessary fiscal bazuk, which stems from more than five years of economic stagnation, can lead to additional € 1 in public borrowing over the next decade.
“The key moment,” said Jasper Raddist, a professor of Copenhagen, who estimated that the managed debt level was 80 percent “or possibly 90 percent”, was that Germany had a “place for responsibility” to pay for urgent improvements and infrastructure.
“Critical infrastructure, for example, is an ineffective rail system and its infrastructure, also digital infrastructure, must be upgraded,” he said.
FT calculations of € 1.9 in the financial space suggest that the German nominal GDP will increase by 2 percent a year from 4.3 tH to 5.4 tH by 2035. This assessment is likely to be conservative as it does not take into account any real GDP growth when infralation corresponds to the 2 -year goal of the European Central Bank.
Many participants emphasized that additional borrowings should be combined with the structural reform to enhance the country’s production capabilities.
“Only the money will not solve problems,” said Ulrich Catater, Chief Economist Deka Bank, based in Frankfurt.
Willy Buter, former Citi Chief Economist and Advisor to Mavecon, called the German economy as “grotesque”.
On Saturday, likely coalition partners have outlined additional details of the policy that are facing economists.
Instead of cutting the red tape and unleashing the growth span, the coalition probably promised new state benefits, including higher pensions for non-working mothers, reduction of VAT for restaurants and re-introduction of fuel subsidies for farmers.
Bert Flosbach, co -founder of the German Flossbach Von Storch asset manager, said on Saturday that a new flexibility of the government spent on defense could create “more opportunities to increase social consumption and further overworing.”
Lorenzo Kodonio, the founder and chief economist of the LC Macro Advisors, said the “real problem” of Germany was his model, which prevailed over the last 20 years and prevailed “complex but old industries”. Germany also needed “leading innovative companies,” he said.
“German branches are stuck in the trap of medium -sized technology,” and the country needs to “modernize” its production, said Enta Aladzh, an economist at the Finnish Center for New Economic Analysis.
Stefan Hoffrichter, economist Global Investors Allianz, accused the stifled bureaucracy and tax regime of the country, saying that the economy was delayed “too solid bureaucracy” and “too high corporate taxes”, which “contributed to private insufficient means”.
Jorg Kramer, Chief Economist Commerzbank, urged Merz’s measuring the influence of the state on the economy and “trust citizens and corporations” instead of pressing the “best business conditions”.
The conclusions were based on 28 quantitative answers that are given the question of whether or not leaving aside from any legal restrictions, Germany can increase its federal debt without the consequences of growth.
A widely quoted 2010 study by Kenneta Rogaf and Carmen Reinhart suggested that a debt exceeding 90 percent, GDP damage, but subsequent studies challenged this conclusion.
“Economic literature does not give a certain response to the relevant level of public debt,” said Isabel Matheos Y Lago, the chief economist of the BNP Paribas group, adding that the dynamics of debt caused by nominal growth and borrowing costs were more important.
All 41 economists who answered the question of a strict debt brake of Germany, which records additional costs of 0.35 percent of GDP, said the borrowing rule that has existed since 2009 should be reduced.
More than a quarter – either 29 percent of the respondents – said it should be completely canceled that 41 percent or repaired to ensure “much more flexibility”. The rest of the economists supported moderate reform to make “a little more flexibility”. No one urged this rule to remain unchanged or hardening.
“() German obsession with fiscal prudence overdo it, and reforms were overdue,” said Martin Morrison, head of the world economy in the German DWS asset managers, adding that the government government “clearly” understood the scale of the problem and the problem. ”
However, on Sunday, lawmakers on the Green Party party said that their current form is planned to create a financial space, moving the cost of defense above 1 percent of GDP.
Their opposition can disrupt plans that require changes to the Constitution of Germany and most of the two -thirds in the upper house of parliament, the Bundesrat.
Visualization of Oliver Reder’s data in London
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2025-03-10 05:00:00
