Draghi's plan is designed for Germany
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DRAGHI’S PLAN IS DESIGNED FOR GERMANY – TS LOMBARD
Former European Central Bank President Mario Draghi recently proposed a European plan calling for new joint funds to boost investments, which Germany has been reluctant to agree to.
TS Lombard European economist Davide Oneglia recalls that Christian Lindner, the fiscally orthodox German Finance Minister, said the plan could be “summarized briefly: Germany should pay for others.”
According to Oneglia, these comments are misplaced, as “Draghi virtually handed them the blueprint for a rescue plan for the German economy.”
“Ironically, on this metric (public investment), Germany should be a net recipient of common EU transfers,” he says, arguing the country has one of the worst track records among developed economies in the matter of public investment.
Furthermore, Germany will not be able to “overcome growing challenges on its own, especially under current policies,” which include a debt brake limiting the federal government’s budget deficits to 0.35% of the country’s gross domestic product.
Oneglia outlines other reasons why Germany will benefit from a joint-EU effort, including the fact that it needs strong EU demand as U.S. protectionism rises, and the EU peripheral economies are currently doing better than core countries.
(Stefano Rebaudo)
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