Scholz – the black zero remains

In the last days and weeks there had been rumours that Germany would abandon its policy of a black zero in view of the strong economic downturn. Only yesterday such speculations came up again and thus raised the exchange rate of the Euro. Previously, “Der Spiegel” in particular had repeatedly reported on alleged plans by the federal government to increase spending. However, this had always been denied. While such rumours reliably increased the risk appetite on the financial markets, the denials then evaporated just as reliably in the orbit of the hopeful disciples.

So it is today. Because a few minutes ago the German Finance Minister Scholz, also known in Hamburg as the “Scholzomat”, once again made it clear that the draft budget for the year 2020 would continue to stick to the black zero. The draft is “expansive”, and yes, it has to do with great challenges, especially the trade war. But Germany is not in a crisis and has a “solid” fiscal starting position. If there is a crisis, Germany will react, that is “Keynesianism in action”, “an active policy against the crisis. However, it must occur first”.

Aha, so no crisis. But the data of the last weeks and months speak a different language. And so Germany will continue to hold on to the black zero, while other countries are diligently turning their debt spirals around, above all the USA under the Trump government. The German spirit, we suspect, will once again bring recovery to the world…

Olaf Scholz. Photo: Christoph Braun CC0

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