Germany’s Fiscal Turn: Structural Challenges, Political Risks, and European Spillover Effects
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Michael Christl
Abstract
Germany’s €1 trillion fiscal package marks a major shift in its economic strategy, with significant implications for both national policy and the euro area. This article critically examines the potential consequences of the fiscal expansion for debt sustainability, financial stability, and European fiscal coordination. It argues that without accompanying structural reforms – particularly in taxation, public investment, and demographic policy – the shift risks weakening long-term stability and undermining fiscal credibility across the EU.
Acknowledgements
I would like to thank Josef Christl, Sean Bray and Daniel Bunn for their valuable feedback. The author acknowledges the use of AI to assist in proofreading and text editing. All ideas, arguments, and conclusions presented are the author’s own.
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Articles in the same Issue
- Frontmatter
- Editorial
- The End of US Dominance?
- Policy Papers (No Special Focus)
- Alternative Policy Rules and Post-Covid Fed Policies
- Accountability in Action: The European Parliament’s Assessment of the ECB 2024 Annual Report
- Germany’s Fiscal Turn: Structural Challenges, Political Risks, and European Spillover Effects
- Trumpian Neomercantilism, European Fiscal Capacity and the Global Minimum Tax
- Factors Driving India’s Growth: Challenges and Policy Measures
- Policy Forum: The End of US Dominance?
- After Multilateralism: The US and the World Bank
- The Triple Mandate of Development, Climate, and Humanitarian Aid
- The WTO Minus One: A Rules-Based Global Trading System Without The US?
- The Fed in the Crosshairs
- Will China Replace the USA as the World’s Leading Power
- Will the US Protect Taiwan in Case of Chinese Military Aggression?
- War in Ukraine: Is Russia Challenging the US Global Dominance?
- A Fragile Surge: European Support to Ukraine in Early 2025 – New Insights from the Kiel Institute Ukraine Support Tracker
- A Strawman Proposal to Use International Flexibility in Achieving Developed Countries Climate Targets to Catalyse Global Decarbonisation
