Germany has the fiscal power to counter the next crisis: Scholz

BERLIN (Reuters) – Germany has the financial means to "hurry" any future economic crisis, Finance Minister Olaf Scholz said Sunday, suggesting that Berlin release up to US $ 50 billion. Euros extra expenses.

While the economy is on the verge of recession and loan costs are at record levels, Germany is facing domestic and international pressures to abandon its commitment. to strive for balanced budgets and stimulate investment by contracting new debts.

A government official told Reuters earlier this month that the finance ministry was considering issuing debt under more formal rules of deleveraging in order to help fund a climate protection program.

Speaking at a "open house" press conference hosted by the government, Scholz acknowledged the debate over debt-financed spending, while asserting that a state should live according to his means when he lived a period of economic prosperity, in particular because he was better placed to act in case of problem. .

Germany's debt ratio is expected to fall to around 58% of economic output this year compared to 60.9% the previous year, putting it below the EU's debt ceiling of 60%. % and give it more flexibility for future spending.

"So, if we have a debt level in Germany compared to an economic output below 60%, then we will have the strength to deal with a crisis," said Scholz.

Scholz said the global financial crisis of 2008/2009 had cost about 50 billion euros to Germany, adding, "And we must be able to collect that amount (sum of money). . And we can gather that. This is the good news.

The Finance Ministry declined to comment on a media report on Friday that Berlin would be willing to abandon its balanced budget rule and take on new debt to deal with a possible recession.

The German economy experienced a quarterly contraction of 0.1% from April to June, which brought Europe's largest economy closer to recession, with confidence surveys and industrial order data showing no signs of slipping. improvement in the third quarter.

Most economists define a recession as a period of at least two consecutive quarters of contraction.

Scholz said that the German economy was suffering mainly from the weakening of foreign demand and business uncertainty related to factors such as the intensification of the trade dispute between the United States and China.

"The biggest problem is uncertainty, including that caused by the United States of America. commercial war, "said Scholz.

Scholz confirmed over the weekend that he was ready to run for the party leadership of his Social Democratic Party (SPD), co-leader, which has seen his support dwindle since he joined Merkel's conservatives in a coalition government.

($ 1 = 0.9018 euros)