Analysts at Danske Bank offer their thoughts on the German government’s’schwarze Null’ policy discussion that took place over the weekend.
Key Quotes:
“In Germany, discussions regarding the government’s ‘schwarze Null’ policy, essentially committing the German state to a balanced budget at all times, continued over the weekend, with German defence minister Annegret Kramp-Karrenbauer defending the measure in an article in Welt am Sonntag , while members of the Bundestag from both the SPD and Die Grüne were asking for more public investments.
The debate comes after a week when a government source said that the finance ministry was currently reviewing its funding options ahead of an upcoming climate package with costs reaching EUR30bn, which could see the ‘schwarze Null’ policy violated.
For now, however, it seems all coalition partners remain fixed on ‘die schwarze Null’. The discussions should be seen as part of a more fundamental shift and willingness among Europe’s political leaders to embark on financial stimulus in a scenario of potentially impotent monetary policy measures, with Germany being one of the few countries able to do so.”
Share
