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The German Parliament building, the Reichstag, which has been the head of the Bundestag since 1999.
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American tariffs could push the largest economy in Europe to a recession, the president of the German Central Bank, Joachim Nagel, warned Thursday, since Berlin faces a debate on the possible review of his fiscal policies.
“Now we are in a world with tariffs, so we could expect a recession for this year, if the rates really come,” said Nagel, who directs the Bundesbank and serves as a member of the Governing Council of the European Central Bank, during an BBC podcast interview.
Global tariffs exacerbate the existing symptoms of what Nagel described as the “stagnant economy” of Germany, which has hired for two consecutive years amid the combined replicas of the Covid-19 pandemic and the energy crisis caused by Western sanctions in Russia for its three-year invasion of Ukrina.
Meros months after inflation and interest rates began to descend in the euro zone last year, return the Donald Trump fees rate strategy, with the aim of reducing the perceived deficits of their country with commercial partners, it is to bring the markets and fracture the traditionally strong relationship of Europe with its transatlantic ally.
Wednesday, the European Union retaliation Against Trump’s 25% tariffs on Imports of Steel and Aluminum that entered into force that day with a series of counter -arance that affect 26 billion euros ($ 28.26 billion) of goods in the United States, as of April.
“This is not a good policy,” said Nagel, lamenting the “tectonic changes” that now face the world in general. “I hope there is understanding within the Trump administration that the price to be paid is the highest on the side of the Americans.”
Like the world’s third largest exporterAccording to the data of 2023, and numbering the US as the important importer of their assets, Germany is especially vulnerable to tariffs, which could erode its automative and machinery sectors.
Cryptlingly, exports of goods and services represented 43.4% of Germany’s gross domestic product in 2023, According to World Bank dataalthough Federal Statistics Office data Indicate that its excess of foreign trade typically lost more recently at 16 billion euros in January, compared to 20.7 billion euros in December.
The uncertainty led by the rates comes at a time when the EU nations could loosen their budget strings and accommodate additional defense expenses, under the ‘rearm’ plan of the block revealed last week in the midst of uncertainty about the continuous commitment of the United States to help Ukraine.
Fitch ratings Thursday warned That the initiative, which could mobilize about 800 billion euros of defense expenses, runs the risk of reducing the head of the current AAA rating due to the additional debt that will probably be carried out, without causing an absolute reduction.
Foot brake pedal ‘standing
Germany established the tone last week as Friedrich Merz of the conservatives, who is expected to emerge as a chancellor in the next ruling coalition of the country, announced plans to review the so -called “national debt brake” to allow a greater defense expense, in a movement that caused a concentration in the German Bund and the broader actions.
The initiative, which combines the tax change proposals with a fund of 500 billion euros for the infrastructure, has encountered resistance from the Green Party, that the conservatives of Merz and the probable partner of the future coalition, the social democrats, must have an attempt to ensure a two -thirds majority of two -thirds necessary to change the braking of constitutionally braking debt.
Before a session of the Parliament that debated the potential reform, the senior Green official Britta Hasselmann marked “gaps and serious errors in the conception” of the debt plans towards articles such as the prevention of climate change, according to the comments informed by Reuters. Thursday’s session will only lead to a bill, while March 18 will probably be decisive for legislation.
In a note on Wednesday, Deutsche Bank analysts held their basis of the reforms that finally underwent what “it is unlikely to be a passage without problems” in the Parliament in the course of next week, which indicates that a “proposal of commitment” would not significantly alter the expected fiscal stimulus of 3-4% of the GDP by 2027 in the last “that the bank previously Expected conservatives.
Analysts also took into account the possibility of a split fiscal package, with the immediate approval of debt policies and debt brakes and the subsequent adoption of infrastructure plans under a new parliament.
“This would potentially change the composition of the infrastructure package and prepare it more towards social housing,” they said.
