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
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
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
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.”