14-10-14

Should Germany start spending?

The Local: Voices calling for the German government to spend more and end its obsession with balancing its budget are growing louder, with growth forecasts cut by a third on Tuesday. Is the country saving itself into a recession?

Matthias Kullas, from think-tank the Centre for European Policy (cep), told The Local: “We have to wait and see whether Germany really does go into recession, and whether it would be more than a short-term problem.

"At the moment there is no need for additional public deficit. Balancing the budget is still a good goal.”

He said Germany had enough “automatic stabilizers” to keep its economy steady, such as unemployment benefits to keep consumption afloat, in case jobs were impacted.

Kullas argued Germany was not saving itself into a recession, but that newer measures such as lowering the retirement age to 63 have dented the country’s finances.