What's bad for Germany could be good for Europe
Livewire
What's bad for Germany could be good for Europe. In May, growth in Germany was predicted to be just 2% next year. This figure has been halved, to a little more than 1% - the same rate forecasters now expect for the euro area as a whole. Inflation forecasts for the euro area are now expected to rise by 0.5% this year and 0.8% next year. The ECB's inflation target of below, but close to, 2% is slipping further out of sight. This combination of slow growth and persistently low inflation is dangerously self-reinforcing. It keeps debt-to-GDP ratios high across the whole euro area. Depressing confidence and putting additional downward pressure on demand. It's one thing for Germany to lecture Greece, Italy, Portugal and Spain on the need for more responsible economic policies from a position of economic strength. Germany has the fiscal capacity to spur demand with tax cuts and higher public spending. The best policy for the whole euro area has long been obvious, and it's now increasingly clear that it makes sense for Germany itself: (VIEW LINK)
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Livewire News brings you a wide range of financial insights with a focus on Global Macro, Fixed Income, Currencies and Commodities.
Expertise
No areas of expertise