Germany confirms its second year in recession after a 0.2% drop in GDP

These are the latest data corresponding to Germany managed by the «Traffic light coalition» of Olaf Scholz. A new coalition is now beginning its negotiation process and has one of its main work fields in the economy. The director of the IFO Economic Institute, Clemens Fuesthas made a call to the new government partners, Cristianodemocrats and Social Democrats, to design in that coalition an economic model that reduces the risk of the United States and that avoids the European joint indebtedness as much as possible to finance the expenditure in defense. I was urging the new federal government to “be careful instead of fasting.” Points out that Germany now urgently needs an “well -thought and sustainable reform agenda». Fiscal incentives for greater investment by companies will not be enough and encourage to add reduction in bureaucracy and the abolition of expendable regulations, in addition to a reform of social security systems. With less and fewer people used for demographic reasons, it is not possible to maintain current benefits, he explains, and recalls that tax reforms must focus on consumption protection.

Final consumption expenditure also recorded an inter -state increase in the latest data provided by the Federal Statistics Office (+0.2%) and the growth of the government’s final consumption spending (+0.4%) exceeded that of spending on Final household consumption (+0.1%). Government expenditure remains limited by the brake on debt, anchored in the German Fundamental Law and that the new reform government is very possibly. «Here it is precisely where political competence is needed. Until 2019, La public spending rate It was about 45% of GDP, today this figure exceeds 4%. Therefore, it should be possible to reallocate public spending. This can only be done in a process that lasts several years, but you have to start immediately. Once this has begun, we can certainly talk about temporary complementation with debt financing, ”explains Fuest, in an interview published by Handelsbaltt. It is criticized the reform of the debt brake: «Breading is easy, you do not need much competition or political capital for it. Other reforms that Germany needs, such as Reassignments of public spending, reduction of bureaucracy and deregulationthey are more challenging ».

Data, otherwise, emerge the situation of a stagnant and depressive economy. The gross added value decreased 0.3% compared to the previous quarter, according to the last statistic. The economic performance in the manufacturing industry decreased by 0.6%, which represents the seventh consecutive fall. Substantial decreases were recorded in production, especially in the manufacture of machinery and equipment and in the manufacture of motor vehicles, trailers and semi -trailers. The economic performance in the construction industry also decreased again, falling 0.9%. There was a decrease especially in the works of completion of buildings, which depend less on meteorology.

Outside the industry, the gross added value in the financial and insurance activities sector was substantially lower than that of the anterior quarter (-2.1%). The performance in business services and other services also decreased compared to the previous quarter (-0.3% each). On the contrary, the added value increased in the aggregate sectors of commerce, transport, accommodation and food services (+0.5%) and public services, education, health (+0.3%).