Financial expert warns of the impending impact of the budget crisis on the European economy

Financial expert warns of the impending impact of the budget crisis on the European economy

According to a report by www.tagesschau.de,
The current budget crisis in Germany could have a negative impact on the European economy. According to the Germany Desk of the Organization for Economic Co-operation and Development (OECD), the reduction in government investment in Germany will inevitably have an impact on the EU economy, as fewer intermediate and final goods and services may be imported.

Reducing government investment could have consequences for the entire economy. Public investment has a direct effect on private investment, with every euro of public investment leading to an average of 1.50 euros of private investment. However, government investment in Germany is relatively low compared to other countries and is well below the OECD average. The OECD is therefore in favor of reforming the debt brake and emphasizes that structural reforms and high levels of public investment are necessary.

Companies in Germany are worried due to the current uncertainty. The steel industry is warning of the failure of billion-dollar projects to convert to “green” production. However, public investments are accepted by the population; A survey by the Hans Böckler Foundation shows that a good two thirds of all Germans demand higher government investments.

Overall, the reduction in government investment could put a strain on the European economy and increase the fragility of the economic situation. Companies and the public are worried and economists are warning of a looming recession in the euro area. The situation could be made even more difficult by possible cuts in public investments.