Aline Schuiling, senior economist at ABN AMRO, suggests that for the German economy, even in the unlikely event that early elections were held, the chances of a big fiscal boost seem low.
“To begin with, according to current government plans, the general budget surplus would decline from around 1.2% GDP in 2019 to 0.2% in 2021. This means that, staying within the rules of the debt-brake, extra spending of around EUR 15-20bn would be possible during the next few years, which would raise annual GDP growth by roughly 0.2-0.3pp.”
“Alternatively, a bigger fiscal boost would mean that the debt-brake rule needs to be changed, which would require two-thirds majorities in each of the two chambers of parliament.”
“Looking at the current distributions of the seats in parliament as well as recent polls for new elections, the parties in favour of changing the debt-brake rule would miss the two-thirds majority by a wide margin.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.