Germany’s economy is in dire straits, and France is not happy about it, according to a recent Reuters article. In fact, “Germany should act sooner rather than later to revive its flagging economy, France’s finance minister said on Thursday, as he struggled to hide frustration with the pace of Berlin’s efforts to engineer a recovery,” according to the news service. The country’s policymakers are suggesting that Germany isn’t doing enough quickly to help grow its economy. More specifically, Reuters wants “Berlin to do more with its budget surplus.”
France’s Finance Minister Bruno Le Maire said that the two countries have been working together on a way to help the ongoing global economy issues and trade tensions, according to the news report, although more must be done. Le Maire added that there are three approaches to the strategy. “Keep reducing public debt where it is necessary. And it is the case in France; keep pursuing structural reforms, as we are doing in France; have budget policies that can take up the baton from monetary policy,” according to his comments during a news conference.
But it isn’t only France calling for greater action by Germany. The head of the European Central Bank, Mario Draghi, also called for more to be done, according to the Associated Press. He “said last week it was ‘high time’ for government spending to take over as the main tool of economic policy. The central bank announced interest rate cuts and bond purchases in an attempt to ward off a downturn,” according to the news service.
Meanwhile, there are indications that investments in green technologies could be a boon to Germany’s economy and lead to jobs growth, although potentially not quickly enough. “The government is expected to unveil a package of incentives aimed at reducing carbon dioxide emissions from homes and autos so that Germany can meet its goals under the 2015 Paris climate accord,” according to the Associated Press. “Possible measures include incentives to replace old heating systems or to purchase battery-powered autos. A report in Die Welt newspaper said the government was considering measures totaling some 40 billion euros ($44 billion) through 2023.”
Carsten Brzeski, chief economist for the bank ING Germany, said that while it won’t completely solve the country’s financial issues, it’s a good start. “It would not be enough to stop the slide of the economy toward recessionary territory, but it could be an important cornerstone in Germany’s recovery and its quest for a new economic model,” he reportedly said.
He added in an interview with the Associated Press: “[It] will add up over time and support domestic demand,” he said. “However, the German stimulus will not be a European, let alone a global, game changer.” Meaning? More needs to be done, quickly.
In conclusion, while France and economists are calling for Germany to step up to help its own struggling financials more quickly, there’s hope that investments in green technology to combat climate change can help.