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German economy suffers a blow: growth is cut in half, despite massive budget increases.
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Germany’s economic woes deepened today, March 17, as one of the country’s top think tanks halved its growth forecast for the year – despite a massive spending boost looming on the horizon.
Munich is home to the Munich-based Ifo Institute Germany’s economy is now expected to advance by 0.2% only in 2024. This is a halving of the January forecast. This comes even as political heavyweights push for a €1 trillion spending spree Revitalisation is the goal Infrastructure and defence in the next decade
“The German economy is treading water,” warned Timo Wollmershäuser, head of forecasts at Ifo. “Despite the recovery in purchasing, consumer confidence remains low, and businesses are also reluctant.
The warning comes as the Christian Democrats (CDU), under Friedrich Merz’s leadership, and the Social Democrats (SPD), who currently rule Germany, are pushing for a radical change in Germany’s Budget Rules, which would scrap the country’s longstanding obsession with fiscal disciplines.
Will Germany be able to save itself by spending big?
Economists say that if the spending plan is successfully implemented, this could encourage consumers to relax their purse strings and rekindle confidence in investors.
“Reliable economic policy is vital to creating confidence and stimulating investment,” Wollmershäuser added.
Deutsche Bank analysts estimate that the spending blitz which is expected by tomorrow to be approved by Parliament and Friday to be approved the Federal Council could add an additional 3-4 % of GDP to Germany’s budget in the next 2 years.
Analysts warned that “don’t underestimate the size of this package.” Please note the Client.
What lies ahead for Europe’s largest economic power?
All eyes are on this billion-euro bet to see if it pays off. Will the flood of cash be enough to lift Europe’s biggest economy out of the doldrums – or will it be a case of too little, too late?
Germany’s economic motor is running on fumes at the moment, and its leaders have been scrambling to get it going again.
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