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- Chances of a big fiscal boost in Germany seem low – ABN AMRO
Chances of a big fiscal boost in Germany seem low – ABN AMRO
Aline Schuiling, the senior economist at ABN AMRO, says that for the German economy, even in the unlikely event that early elections were held, the chances of a big fiscal boost seem low.
- “To begin with, according to current government plans, the general budget surplus would decline from around 1.2% GDP in 2019 to 0.2% in 2021. This means that, staying within the rules of the debt-brake, extra spending of around EUR 15-20bn would be possible during the next few years, which would raise annual GDP growth by roughly 0.2-0.3pp.
- Alternatively, a bigger fiscal boost would mean that the debt-brake rule needs to be changed, which would require two-thirds majorities in each of the two chambers of parliament.
- Looking at the current distributions of the seats in parliament as well as recent polls for new elections, the parties in favour of changing the debt-brake rule would miss the two-thirds majority by a wide margin.”
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