News from Berlin

Germany and France Solicit Economist Advice to Revive Growth

October 14th, 2014
German Economy.jpg

News from Berlin - With the recent report that 0.5 points has been knocked off Germany’s growth forecast for this year, the euro-zone could see a terrible economic slowdown. For Germany, the former powerhouse of economic growth, a recession seems possible and so it has been necessary for the country to review and seek advice.

As reported by the Wall Street Journal, the two European Union powerhouses have sought prominent economists to advise on the state of the economy and how to avoid a ‘lost decade’, in an attempt to bridge the growing divide between the two countries over how to revive flagging economic growth in Europe. Warned by the experienced economists that Europe's lagging recovery risks 10 years of "low growth, excessively low inflation, high debt and high unemployment," the advice was necessary to revive the countries, and Europe’s, lagging economic growth. German Economics Minister Sigmar Gabriel and French Economy and Industry Minister Emmanuel Macron solicited help from economists Jean Pisani-Ferry and Henrik Enderlein, both lecturers at the Berlin-based Hertie School of Governance. The ministers asked the economists to identify Franco-German initiatives to boost growth in Europe and recommend measures to be implemented by 2017 in order to modernize and strengthen the economies.

Although here has been futile denial from Finance Minister Wolfgang Schäuble that Germany’s economy is in danger, the International Monetary Fund still encourage Germany to spend more and encourage investment and public consumption. To quote Schäuble in Luxembourg: "We in Germany have no reason for any nervous, hysterical hyperbole [about an economic slowdown]". He added that investment in Germany should be primarily private.

However it is not all doom and gloom for Europe, Spain’s economy for example, appears to be on the mend. According to the Instituto Nacional de Estadística in July ’14, the economy grew by 0.6% reflecting a widening gap between countries that have embarked on convincing structural reform programmes and those that have not.

News from Berlin – Berlin Global