Germany can spend almost €2tn without harming growth

The German government can take less than two dollars euros over the next decade without being at risk of harmful growth, according to the analysis of Financial times, survey times to measuring economists in the eurozone that supports Pazukua Friedrich Mirz’s potential financial.

The economy survey conducted last week estimated that the largest economy in Europe could raise its financial burden from its current level of 63 percent of GDP to 86 percent of GDP during the next decade without negative repercussions. The 28 economists ’responses mean the financial space 1.9 euros.

“The space to create more debts should be used to push Germany and the broader European economy towards” high -tech and effective green transition sectors. “

The results come after Mirz, President of Christian Democrats in the center, and his potential partner in the coalition, revealed on Tuesday, plans to enhance the country’s infrastructure and raise defense spending.

Economists expect that the financial Pazooka is in need, which follows more than five years of economic recession, can lead to additional general borrowing over the next decade.

“The main point,” said Jesper Rangvid, a professor at Copenhagen College of Business, who estimated that the level of management debt reaches 80 percent “or perhaps 90 percent”, said that Germany has a space for borrowing responsibility “, to pay the costs of the infiltration and infrastructure it needs urgently.

He said: “The critical infrastructure, such as the ineffective rail system, must be promoted in general, with its infrastructure, digital infrastructure,” he said.

FT accounts of 1.9 million euros in the financial space assume that the German GDP will increase by 2 percent annually from 4.3 Tion euros to 5.4 TRi euros by 2035. This estimate is likely to be conservative, because it does not explain any real growth in the gross gross domestic product, in the event that inflation is proportional to the central bank’s goal. European.

Many participants stressed that the additional borrowing should be combined with structural reform to raise the country’s productive capacity.

“The money will not be solved on the challenges,” said Ulrich Catter, chief economist in Frankfurt -based Deca Bank, Frankfurt.

William Bridge, the former chief economist in City and a consultant in Mavercon, described the German economy as “exotic in the strange”.

On Saturday, potential coalition partners have identified more policy details that collide with economists’ calls.

Instead of cutting the red tape and launching pro-agriculture reform, the potential coalition instead promised the advantages of the new country-including the highest pensions for non-working mothers, reduce value-added tax for restaurants, and re-submit fuel subsidies to farmers.

Bert Flossbach, co -founder of German Asset Director Flox von Stores, said before the announcement on Saturday that the flexibility of the new government in a large defense spending could create “a larger space to increase social consumption and amplify the welfare state further.”

“The real problem” of Germany has been its model that prevailed over the past twenty years and was dominated by “advanced but old industries.” He said that Germany needed “pioneering innovative companies.”

“German industries are stuck in the trap of middle technology” and the country needs to “update” their manufacture.

Stefan Hovrcher, an economic expert in Allianz International Investors, blamed the bureaucracy and the tax system in the country, saying that the economy has decreased because of the “very strict bureaucracy” and “very high companies taxes” that were “contributing to private investment”.

Joerg Carar, the chief economist at Commerzbank, Merz, urged to re -contact the country’s influence on the economy and “trust citizens and companies” instead in a batch for “better working conditions”.

The results were based on 28 quantitative answers given to a question about whether, leaving any limits to legal borrowing, aside, Germany could raise its federal debts without repercussions on growth.

A 2010 widely conducted study conducted by Kenneth Rogeov and Carmen Renhardt suggested that debts exceeding 90 percent of GDP are harmful to growth, but subsequent research has challenged this conclusion.

Ezabelle Matthews E Lago, chief economist at the BNP Paribas group, said, adding that debt dynamics are driven by nominal growth and borrowing costs were more important.

All 41 economists who responded to a question about strict debt brakes in Germany, which closed additional spending by 0.35 percent of GDP, said that the borrowing base, which has been in force since 2009, must be diluted.

More than a quarter – or 29 percent of the respondents – said that it should be completely canceled, which was repaired by 41 percent or repaired to provide “much more flexibility”. The remaining economists supported moderate reform to enter “a little more flexibility”. Nobody called on the base to be left without changing or hardening it.

“[The] Martin Morrison, the global head of economics at the director of German assets at DWS, said, adding that the next government “is clear that” the German mania with financial caution has been late.

However, the legislators of the Green Party said on Sunday that they opposed, in their current form, Mirz’s plans to create a financial space by transferring defense spending above 1 percent of GDP outside the debt brakes.

They can frustrate their opposition plans, which require changes to the German constitution and the majority of the two -thirds of the Senate in Parliament, to pass them.

Data is visualized by Oliver Roider in London