According to senior officials, the German government is looking to stop its unique policy for balanced budgets with the aim of funding a high cost climate protection program, by generating new debt. The current government headed by Chancellor Angela Merkel has managed to boost public spending rates without increasing new debt since 2014.
This can be attributed to increased length of the growth cycle, favorable inputs from tax revenues, reord high in employment rates, and the bond buying plan set by the European Central Bank. On the other hand, Germany’s borrowing costs have been in a near constant slump, and the country’s economy is slowing down owing to factors such as reduced demand from overseas and the impact from trade disputes.
Concerns from international and domestic sources are rapidly becoming louder, encouraging the government to provide additional stimulus to the economy by reducing the size of the deficit again. According to officials, the key challenge for the government at present is to plan out the method of change in the fiscal policy, without opening out massive outflows from the federal budget, as the trend of debt will push increased monetary demand.
Germany Increases Focus on Climate Change Prevention
The government at Berlin is expected to limit the new debt to only the climate protection program that Merkel’s cabinet has set to initiate in the coming month. The new climate protection plan has been developed by the coalition government to soften the impact of the country’s plan to move away from coal in the next 20 years, which is anticipated to require a minimum of 40 billion euros into affected regions to aid in the shift away from fossil fuels.
The coalition is also promoting payouts from the family to minimize the adverse social effects such a move will have on low-income families. According to officials, the government was fully invested in combating climate change, and the next steps towards the emission reduction objectives would be decided at the climate cabinet’s next meeting, which is scheduled for the 20th of September.