Germany: Very low chances of a big fiscal boost – ABN AMRO


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.

Key Quotes

“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.

Feed news

Latest Forex News

Editors’ Picks

GBP/USD off 7-month highs, still firmer as Tories hold the lead

GBP/USD retraces from the new seven-month highs of 1.3180 but remains strongly bid, as weekend polls have reaffirmed a solid lead for PM Johnson's Conservatives. Cable dropped on Friday amid upbeat US data.

GBP/USD News

EUR/USD steadying above 1.1050 amid upbeat German export data

EUR/USD is trading above 1.1050, attempting a recovery after Germany reported an increase in exports in October. EUR/UDS dropped sharply on Friday amid upbeat US Non-Farm Payrolls and weak German industrial output. 

EUR/USD News

Forex Today: US-Sino trade tensions prevail, Boris closer to victory, EUR/USD licking its wounds

Trade talks: President Donald Trump has called on the World Bank to stop lending to China, a move that may aggravate tensions, with only six days to go until Washington is set to slap new tariffs on Beijing. Negotiations continue.

Read more

Gold clings to modest gains above $1460 level, lacks follow-through

The latest NFP report surpassed most optimistic estimates, which provided a goodish intraday lift to the US dollar and eventually prompted some aggressive selling around the dollar-denominated commodity.

Gold News

USD/JPY in search of a firm direction, stuck in a range above mid-108.00s

USD/JPY was seen oscillating in a narrow band and consolidated last week’s losses. US-China trade uncertainties continued underpinning the JPY’s safe-haven status. Investors now seemed reluctant ahead of the latest FOMC monetary policy update.

USD/JPY News

Forex MAJORS

Cryptocurrencies

Signatures