Germany's Fresh $146 Billion Stimulus

Germany's Fresh $146 Billion Stimulus

over 3 years ago2 mins

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Germany’s not letting this new WFH lifestyle affect its get-up-and-go: the government announced $146 billion of new economic stimulus on Thursday 💶

What does this mean?

Economists had been expecting Germany to reveal some economy-boosting measures, sure, but not quite such significant ones. The amount ringfenced was 30% more than they’d predicted, while the plan itself involves a temporary lowering of value-added tax, which will make buying goods and services a collective $22 billion cheaper and should, in turn, encourage more spending. It’ll also give children a one-off payment of $336, small businesses additional loans, and larger corporations tax breaks to encourage them to invest.

Germany unleashed the world's largest stimulus in relation to GDP | The Wall Street Journal
Germany unleashed the world's largest stimulus in relation to GDP | The Wall Street Journal

Germany’s thinking about the future too: its plan includes infrastructure spending for 5G and railways, as well as incentives for the country’s all-important auto industry – home to embattled global giants Volkswagen, BMW, and Daimler – to double-down on the development of electric vehicles ⚡️

Why should I care?

The European Central Bank (ECB) has repeatedly asked eurozone countries to take more responsibility for rescuing their own economies, and it looks like that’s finally sunk in for Germany 🏦 Its short-term tax cuts should help pull the country out of recession, while the support for key industries should allow it to maintain its global status in the long term. Then again, Germany has a lot of financial flexibility given that it typically earns more than it spends. Countries with weaker budgets like Italy and Greece will likely rely more on the ECB – and might’ve been pleased to hear on Thursday that the Bank had boosted its support program by a higher-than-expected $675 billion.

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German sports titan Adidas said on Thursday that sales in China had recovered more quickly than predicted – in contrast with rival Nike’s expectation of a slower pickup. But after a controversial patch, the two companies are now standing shoulder to shoulder where it counts: in denouncing racism and racial injustice. Duh.

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