next government enjoys fiscal scope
The next government enjoys fiscal scope for the time being. However, it will be
used for spending programmes rather than systematic tax cuts – in line with the
paternalistic state concept of the grand coalition partners. Once interest rates
and economy start to normalise, though, the federal budget ought to
immediately slip back into negative territory.
At present, the predominant feeling is relief that Germany now has a
“decent“government. But not only coalition partners may soon wonder whether
the price is too high. Speculation about an early end of the Groko have already
started, particularly because the partners are likely to position themselves well in
advance for the post-Merkel era. After all, there are enough breaking points.
EU Forecast
euf:ba1.8i:151/nws-01