Financial expert reveals: Traffic light coalition faces historic need for consolidation

Financial expert reveals: Traffic light coalition faces historic need for consolidation

According to a report by www.faz.net, according to the Federal Constitutional Court's ruling, the traffic light coalition's budget deficit does not represent an exceptional budget emergency. Previous governments have often made similar or greater efforts in similar fiscal crises.

A particularly striking example of this is the year 1982, in which the consolidation of the state budget reached 1.18 percent of gross domestic product (GDP). This corresponds almost exactly to the current consolidation needs of the traffic light coalition, based on an estimate by economist Thiess Büttner. According to this, there will be a financial gap of 52 billion euros in the coming financial year, which corresponds to around 1.2 percent of the expected economic output.

As a financial expert, it can be concluded that the necessary consolidation of the traffic light coalition's budget is not an unusual task. Previous governments have met greater challenges primarily by cutting spending. The current financial situation may require similar measures to reduce the deficit. This could have an impact on the financial market and the economy, as cuts in public spending and possibly tax increases can affect consumption and investment spending. However, the exact impact will depend on the specific measures the government will take to consolidate its budget.