Struggling Merkel Hides Facts on German Recession -Bundestag and Population

Chancellor Angela Merkel’s administration foresees a downward trend for German economy but chooses to keep voters unaware of the situation for now.  With Merkel entering her final years in politics, German officials do not want to put her in a bad light. 

Merkel’s team is preparing for the recession quietly and analysts say that the risky plan to patch up Deutsche Bank AG through a merger with domestic rival Commerzbank AG is a clear indication that trouble is brewing. 

“There are many global risks currently overshadowing the economy,” said Matthias Heider, a lawmaker from Merkel’s CDU party and a member of the economics committee in the lower house of parliament. “If global risks accumulate further, it might be too much for growth to be sustained.”

Merkel has been mum on the imminent recession.  In an address to the Bundestag last week, she told lawmakers that she foresees “times of growth” ahead, while the outlook for the European Union has become “somewhat clouded.”

In a newspaper interview, Finance Minister Olaf Scholz stated that he is ready to utilize all the fiscal leeway in order to boost the economy in the event of a crisis but he will not resort to changing rules just to provide more ammunition.

The government is ready to pass different measures to curb recession, ranging from tax cuts to investment incentives, according to people privy with the government’s plans but requested anonymity. 

Preliminary proposals include Merkel’s coalition suggesting consumer-focused spending while others preferred to focus on businesses.

While contingency plans are being finalized, it is important to note that Germany may be able to survive an economic downfall because of its strong financial position brought by disciplined spending with public debt decreasing to just 60 percent of output last year.

Scholz hinted he may be ready “to deploy some of that firepower” when presenting his latest budget last week in Berlin, saying that “good, stable finances are the best way to prepare for a period of greater economic uncertainty.”

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