In Germany, the poor economic performance of the last two years has taken centre stage.
Key takeaways
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The German economy has been lagging behind other Eurozone countries due to structural changes in its economic model and global trade. A huge investment effort would be needed to relaunch it. Economists recommend making up the lost ground within ten years by making massive infrastructure investments.
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A head of February’s election, many parties are proposing to reform the debt brake rule. While a major fiscal stimulus plan should not be anticipated next year, even modest reforms could influence positively investor sentiment, particularly if paired with a new off-budget fund for defence spending.
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The Constitutional Court ruling of November 2023 does not rule out the possibility of new off budget funds in Germany. While the court emphasised that special funds must serve their intended purpose, the successful €100bn defence fund established after the invasion of Ukraine implies that similar initiatives could be pursued to address pressing needs.
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