The economic policy misdiagnosis: market liberal errors and real consequences

The economic policy misdiagnosis: market liberal errors and real consequences

According to a report by www.zeit.de,

The traffic light government is planning radical spending cuts and revenue increases for 2024 in order to continue to comply with the debt brake. This step is seen as part of a new federal budget that is intended to continue austerity policies despite the Federal Constitutional Court's ruling. This approach is seen by some experts as an economic policy misstep that could lead to a period of economic stagnation. However, a recent study by a renowned economic expert, Tom Krebs, believes a green economic miracle is possible and shows how this can be achieved.

The planned austerity policy and spending cuts could lead to a short-term decline in public investment and a dampening of consumption. This could lead to low overall economic activity and have a negative impact on economic growth.

There is also a risk that austerity policies will lead to an increase in unemployment and lower consumer purchasing power. This would impact various industries, particularly the retail and service sectors.

The increases in revenue could also lead to higher tax burdens for companies and citizens, which in turn could affect investment activity and the confidence of market participants.

The austerity measures could potentially lead to a lower competitiveness of the German economy in the international market as investments in research, innovation and infrastructure are reduced.

Overall, the planned austerity policy could lead to lower overall economic activity, lower competitiveness, unemployment and subdued investment activity. It therefore remains to be seen how the economy will develop in the coming years and to what extent the controversial measures of the traffic light government will actually achieve the hoped-for results.