A look at why debt rules are negatively impacting the German economy. I have started a new channel on global economics. Here I went into more detail about the problems facing the German economy. https://youtu.be/OKuCtXWWDpk
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Last year who would you guess was the worst performing major economy Italy UK Greece well actually it was the economic Powerhouse of Germany last year Germany had their highest inflation rate in the postwar period real wages fell and was a general economic malays in the UK we’ve
Developed a dark sense of humor about our Railway system inefficient late canceled trains and overpriced when trains are canceled for the wrong kind of leaves on our track we kind of Shug our shoulders and make a joke but no one in Germany is laughing at how they want much vaunted Railway
System seems to be picking up the British disease of council trains late services and now drivers on strike Germans have bemused to find their economy slipping down League tables of competitiveness Germany has seen the biggest fall in the attractiveness of business in The World Slightly worse even than brexit br Britain now there
Are some simple explanations to why Germany did badly last year it was Germany who was most affected by the loss of cheap Russian gas and soaring oil and gas prices however the crisis of 2023 also highlighted the German debt break rule which limits the amount that governments can
Borrow last year a German Court struck down as unconstitutional a 60 billion EUR worth of investment in CL change policy from an economic perspective an economy facing recession which forces spending cuts on itself to meet arbitrary debt rules is literally tying its own hands together it’s a self-imposed austerity leading to a self-imposed
Recession there are two golden rules of government borrowing firstly it can be justified when there’s a fall in private sector spending and the economy is heading to recession it’s a class classic kesian analysis that government can take up a slack of the private sector to prevent a deep recession and
Unemployed resources secondly borrowing can be justified to invest in long-term investment and infrastructure which helps to promote long-term economic growth and development this kind of borrowing can lead to higher economic growth and therefore higher tax revenues in the future and also you could add a third reason to justify borrowing to
Protect long-term environment and also reduce your Reliance on untrustworthy geopolitical Partners in Germany’s current climate all three major reasons for government borrowing are there Germany’s faced a real economic shock of losing cheap gas it quickly needs to develop alternative sources of energy for both environmental and economic
Reasons if ever there was a good time to borrow it’s now now debt break rules are often politically popular it’s because we liken government finances to our own household finances we all know the famous Charles Dickens quote about slightly overspending leading to misery but government borrowing is different
It’s more like a young member of a family borrowing from a rich Uncle who has loads of surplus savings if we go to university we take out a student loan because it’s an investment in our future earnings if we never borrowed we would never be able to invest in buying a
House or getting an education and at the end of our life we might have no debt but we’d be worse off so there are kinds of debt which are not Reckless but actually very desirable and if there one country who could afford to easily and cheaply borrow it’s Germany German debt to GDP
Is very low by International standards for example Japan a similar country has debt of over 250% of GDP in 1950 the UK also had very high debt of over 240% of GDP if the UK had had a debt break rule like Germany does now there would have
Been no NHS no investment in public housing no postwar rebuilding of the economy debt breaks just tend to force the government to make bad decisions pursuing an artificial goal of debt limits and failing to invest in necessary investment which would lead to long-term benefit benefits now abolishing debt rules does not mean we
Always seek to increase government spending or borrow more from a king perspective the US shouldn’t be running such a large budget deficit at this stage in the economic cycle when growth is high you should be reducing debt not adding to it also the government should not be seeking to replace the private
Sector investment but there has to be a recognition the public sector will not invest in uh public goods like energy security and long-term environmental goals also not every country has a flexibility of Germany for example this advice for abolished debt rules or not wor about debt wouldn’t be applicable to
A A Serial defaulter like say Argentina the truth is the German economy has many strengths but adance to strict fiscal rules are not helping now I’ve also got some exciting news in that I’ve started a new economics Channel a global economics this current channel will
Focus on the UK and this video is really a teaser for a video I made on the all the in-depth problems facing the German economy it’s not just about debt rules but how the German car industry risks getting left behind by a new digital economy so please do check it out and if
You’re interested in global macroeconomics uh do subscribe to the channel because there were lots of great videos coming soon thanks
39 Comments
I have started a new channel on global economics. My first video goes into more detail about the problems facing the German economy. https://youtu.be/OKuCtXWWDpk
Please check it out and consider subscribing to my new channel! (This channel economicshelp will focus on UK)
The shared Zelensky curse!!! 🫣🫣🫣
Ditch austerity, pursue innovative investments
I fully desagree!
Do ppl not understand European politicians including our own have sold us out for Americas benefit. Putin did everything he could to prevent a conflict before entering Ukraine. If you look at Russia's drop in military spending and arms from 2016 it tells you they were not preparing to invade anywhere. It's America benefiting, the stock market tells it all, the money the UK just promised Ukraine actually goes to Americas military complex. The old weapons countries donated replaced with new American weapons at tax payers expense. The oil and gas sanctions replaced with American. Wake up citizens your Politicians are in bed with American multi nationals against your interests. Once you understand who's interest your politicians are working in it all makes sense.
Oh no 😢😢
Great you got another channel but how can you do manage all the work load?🚚
But the life is still better in Germany…😂😂😂 more benefits, earning more…. No council tax, child benefit .
,tax benefit… Train ticket to London 35minutes travel 45pound 😂😂😂 if you don't live there you can't judge….100%..
Germany's gas pipelines were blown up. That will wreck Germany's economy.
How can thst be when Germany is part of the union!
Thr difference is Germany doesn't have decimated public services and is a far more equitable economy than the UK
MUSSOLINI CAME TO POWER BECUASE HE PROMISED TO KEEP THE TRAINS ARRIVING ON TIME
No one talks about the cost of Ukraine which is about 2.5 billion
The UK spends 112 billion a year servicing government debt….. this money could be spent on other things. Debt is not a good thing
People from.UK judging Germany. 😂😂😂😂😂
Here in US federal debt is $35 trillion. Interest alone nearly $1 trillion.
It was Brown who kept on borrowing during a so-called growth boom. Terrible error.
Simple to know that high energy price will not friendly to economic but German leader dunk to run. New economy hero, like India but become top economy easy in this opportunity.
Boomeranged sanctions.
They should never have upset the Russians and quit the stupid net zero madness.
DO YOU MEAN IN A FU##### MESS
South Africa was never a 1st world country. They only had a minute percentage of the of the population ( the 8% white citizens) that lived in the luxury while the vast majority of the population lived in utter squalor without plumbing and power. After they became democratic the majority of the population eventually gained access to the limited resources and development that were only sufficient enough to maintain a 1st world living standard for the small white population. This naturally overwhelmed the system.
The issue is that government borrowing isn’t being invested wisely. Take green investments, which is what Germany ruled against, they are not the most efficient use of government money. The most efficient use would be nuclear energy, which is clean, safe and has huge output.
Green investments are an expensive fad. They look good, it’s in vogue, and many in the electorate are dumb enough to believe they’re better than the alternative.
Investing in nuclear would be wise, as it would not only secure a new energy source but would also produce vast amounts of clean energy, at lower cost than renewable, allowing Germany an advantage in years to come.
The UK is spending our money military activities and losing lol 😂
Excellent educational video. Thank you for making these videos.
RS. Cany
its the same country like spanish city in new castle the spanish flue con,keys,todoors the Spanish sit he
The UK economy has been growing above the EU average and above Germany for 3 years now, so I think they wish they were becoming like the UK, although I would admit thats not a lofty ambition.
Cannot pronounce his "R".
European industries totally torpedoed by U$UK, since the b0mbing of NS1&2.
You reap what you sow.
Why can’t World leaders get together and create one World economy to prevent poverty.Money is man made.
Germany did not “lose” cheap gas — they decided to be a good vassal and cut them selves off from Russian energy supplies without first finding new suppliers and planning a transition to protect their citizens from economic hardship.
A classic “own goal” which they refuse to take responsibility for…
Why did Germany allow my government to block a transparent independent UN investigation into the Nord Stream Pipeline sabotage??? They should have insisted that we pay for repairs to their vital infrastructure instead of supporting theft of Russian foreign reserves.
Why? Because they choose to be american puppets, that's why
It would be true that taking dept in order to make Investments could help the economy. However, we have a government that is highly ideological and wants to stop global climate change on its own. So it does only invest in unsustainable projects that follow this ideology
Some economists have projected that both the U.S. and parts of Europe could slip into a recession for a portion of 2024. A global recession, defined as a contraction in annual global per capita income, is more rare because China and emerging markets often grow faster than more developed economies. Essentially the world economy is considered to be in recession if economic growth falls behind population growth,
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when you hit the rocks due to the debt, the LAST thing you do is borrow more…..
Because Conservatives.
You have to do something about the spam in your comments section
Unfortunately, most politicians spend for photo ops and vote whoring and not competent investment.