Germany has fiscal muscle to counter next crisis - Scholz

Associated Press

Associated Press

Germany's finance minister Olaf Scholz announced that the country has adequate fiscal strength to counter future economic crises, and indicated that the German government could make up to 50 billion euros ($55 billion) available for additional spending capacity.

The Germany economy is now at the brink of recession, which can be largely attributed to record low borrowing costs, and the consecutive pressure to give up the target of a balanced budget, and replacing it with increased investment, through the aid of new debt.

A government official told Reuters earlier this month that the finance ministry was toying with the idea of issuing debt in line with the more formal debt-brake rules to help finance a climate protection program.

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Germany's debt is anticipated to fall by approximately 58 per cent of the total economic output in 2019, from the 60.9 per cent of 2018, which brings the debt level to lower than the debt in the European Union's debt ceiling of 60 per cent.

Scholz said the global financial crisis in 2008/2009 had cost Germany roughly 50 billion euros, adding: "And we have to be able to muster that". And we can muster that.

The German economy could have continued to shrink over the summer as industrial production drops amid a dearth of orders, the Bundesbank said on Monday, suggesting that the euro zone's biggest economy is now in a recession.

Most economists define a recession as a period of at least two consecutive quarters of contraction.

Scholz said the Germany economy was suffering mainly from weaker foreign demand and business uncertainty linked to factors such as the escalating trade dispute between the United States and China.

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