Will Germany's trillion-euro debt gamble pay off?

DW (English)

With Germany's infrastructure crumbling and its military in shambles, the new government plans to spend close to a trillion euros on improvements. But will the fresh borrowing boost growth or burden taxpayers for years?

Transcript

00:00This collapsed Carola Bridge in Dresden is just one symbol of Germany's crumbling infrastructure.

00:07Across the country, there are decaying roads and schools alongside outdated technology.

00:13The investment backlog is massive.

00:16The party is likely to form the next German government.

00:19The conservative CDU and CSU and the Social Democrats plan to invest 500 billion euros

00:25in transportation and energy infrastructure, digitalization, education and research.

00:32The German military is also set to receive several hundred billion euros in additional funding

00:38as the Bundeswehr has suffered from outdated equipment and decades of budget cuts.

00:44To finance this, new debt will have to be incurred, which could place a burden on taxpayers.

00:49Some economists criticize this as a mortgage on the future,

00:53arguing that private industry should be the primary investor.

00:57Others are less concerned about new debt,

01:00such as the head of the German Institute for Economic Research, Marcel Fratzscher.

01:05The German government currently doesn't have a very high debt-to-GDP ratio.

01:10It's about 63 percent.

01:12That's one of the lowest levels of public debt compared to other industrialized countries.

01:18This additional spending is likely to increase public debt to probably 75-80 percent over the next few years.

01:25So the big question is, will this package fuel a lot of additional growth

01:31so that at least part of the extra spending is financed via higher tax revenues?

01:37However, and on this most economists agree, money alone is not enough to solve Germany's problems.

01:44Europe's largest economy is struggling primarily due to excessive bureaucracy

01:48and long planning and approval processes.

01:51This has already hurt its competitiveness and driven private investment abroad.

01:58The question now is, the choice is, we continue on the path we have been on for the last 15 years,

02:03we will experience a deindustrialization, lots of good jobs will be lost in Germany,

02:08or will Germany, the government and the companies manage a turnaround,

02:15become more innovative, become more efficient,

02:19and the government has to do its part, cutting bureaucracy, regulation, investing in a better education.

02:27Time is running out to digitize and remove bureaucratic hurdles for investors.

02:32In the sprint towards a healthy economy, Germany might just be racing against itself.

02:37www.globalonenessproject.org

Category

Transcript

Be the first to comment

Recommended