Sunday

29th May 2022

Germany plans extra €10 billion investment to head off EU critics

  • Finance minister Wolfgang Schaueble said the extra spending would not prevent Germany running a balanced budget in 2015. (Photo: World Economic Forum)

Germany has given the first hint that it is prepared to increase public investment to steer a return to economic growth after Angela Merkel's government pledged to invest an extra €10 billion by 2018.

"I will propose to the cabinet that in the course of planning the 2016 budget we allocate additional means for public investment of the order of €10 billion", finance minister Wolfgang Schaeuble told a press conference on Thursday (6 November).

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

Schaeuble added that the extra funds would be matched by higher tax revenues in the coming years and would not break his government's promise to run a balanced budget for the first time in over 40 years in 2015. Most of the money is expected to be earmarked for roadbuilding and other infrastructure projects.

Despite its reputation as Europe's economic powerhouse, and its consistently high trade surplus, the German economy has struggled so far this year and is one of the EU countries to be most affected by the bloc's trade sanctions battle with Russia. It is forecast to grow by 1.2 percent this year followed by 1.3 percent in 2015.

It has also come under growing pressure from the European Commission, the United States and a number of EU governments to boost domestic demand to help other eurozone countries recover.

Last month, French prime minister Manuel Valls called on Berlin to match its €50 billion programme of spending cuts with an investment plan of the same size. The International Monetary Fund has also signalled that Germany could increase spending by up to €50 billion without compromising its budget targets.

For its part, the Paris-based OECD think tank urged EU governments to pursue new stimulus measures in its latest 'Economic outlook' report.

EU governments should "employ all monetary, fiscal and structural reform policies at their disposal to address these risks and support growth,” said OECD secretary general Angel Gurria. The OECD also called on the European Central Bank (ECB) to make a "commitment to sizeable asset purchases (“quantitative easing”) until inflation is back on track".

ECB president Mario Draghi stated on Thursday that the bank would increase its balance sheet by €1 trillion over the next two years following the monthly meeting of its Governing Council.

The ECB has recently launched programmes to buy packaged loans and private bonds as well as a new scheme offering cheap money to banks if they promise to increase their business lending.

Draghi hinted that the ECB's decision-makers were prepared to inject further monetary stimulus, telling reporters that the Governing Council was "unanimous in its commitment to using additional unconventional instruments within its mandate".

Orbán's new state of emergency under fire

Hungary's premier Viktor Orbán declared a state of emergency due to the war in neighbouring Ukraine hours after pushing a constitutional amendment through parliament, where two-thirds of MPs are controlled by his Fidesz party, allowing his government special powers.

Orbán's new state of emergency under fire

Hungary's premier Viktor Orbán declared a state of emergency due to the war in neighbouring Ukraine hours after pushing a constitutional amendment through parliament, where two-thirds of MPs are controlled by his Fidesz party, allowing his government special powers.

Opinion

When Reagan met Gorbachev — a history lesson for Putin

Neither Reagan nor Gorbachev achieved their goal at the famous Reykjavik summit of 1986. Despite that fact there are lessons that current leaders — particularly Vladimir Putin — could adopt from these two iconic leaders.

News in Brief

  1. Dutch journalists sue EU over banned Russia TV channels
  2. EU holding €23bn of Russian bank reserves
  3. Russia speeds up passport process in occupied Ukraine
  4. Palestinian civil society denounce Metsola's Israel visit
  5. Johnson refuses to resign after Downing Street parties report
  6. EU border police has over 2,000 agents deployed
  7. Dutch tax authorities to admit to institutional racism
  8. Rutte calls for EU pension and labour reforms

Stakeholders' Highlights

  1. Nordic Council of MinistersNordic delegation visits Nordic Bridges in Canada
  2. Nordic Council of MinistersClear to proceed - green shipping corridors in the Nordic Region
  3. Nordic Council of MinistersNordic ministers agree on international climate commitments
  4. UNESDA - SOFT DRINKS EUROPEEfficient waste collection schemes, closed-loop recycling and access to recycled content are crucial to transition to a circular economy in Europe
  5. UiPathNo digital future for the EU without Intelligent Automation? Online briefing Link

Latest News

  1. EU summit will be 'unwavering' on arms for Ukraine
  2. Orbán's new state of emergency under fire
  3. EU parliament prevaricates on barring Russian lobbyists
  4. Ukraine lawyer enlists EU watchdog against Russian oil
  5. Right of Reply: Hungarian government
  6. When Reagan met Gorbachev — a history lesson for Putin
  7. Orbán oil veto to deface EU summit on Ukraine
  8. France aims for EU minimum-tax deal in June

Join EUobserver

Support quality EU news

Join us