Editorial of the "World". Taboo for several years in Europe, the concept of fiscal stimulus is returning to the center of the economic debate. The explosion of public debt in the aftermath of the 2011 euro crisis had disqualified the very idea that states could spend more to support their economies. Eight years later, as growth in the eurozone is shrinking and the effectiveness of the European Central Bank's (ECB) action is reaching its limits, it is essential that fiscal policy take over.
This is what Emmanuel Macron reminded during the last G7 in Biarritz, evoking the need for a coordinated revival of the economy with "new tools" . As the economy darkens, the share of public and private investment in Europe's gross domestic product has risen from 22% to 20% in ten years, according to the European Commission, despite the highly expansionary monetary policy pursued by the ECB. since 2014. This is a failure that must be learned from now using the budget lever.
Of course, all eyes are on Germany. Europe's largest economy, which accounts for one-third of the euro area's GDP, is almost at a standstill. Stricken by the slowdown in global trade, a result of tensions between the United States and China, German industry is down 7.5% of its activity in eighteen months. Its flagship automotive sector returned to its 2009 level, at the height of the financial crisis.Article reserved for our subscribers Read also The debate on the fiscal stimulus goes up in Europe
At the same time, Germany has accumulated in recent years huge budget and trade surpluses, which offer him room for maneuver that other countries, starting with France, do not have. While the German public debt is expected to fall below 60% of GDP this year (against almost 100% in France) and real interest rates are lower than the growth rate, Berlin is still clinging to its sacrosanct balanced budget .
Although this rigor has been the cornerstone of the power of the German economy in recent years, it seems less and less adapted to the situation. The powerful German Industry Federation (BDI) is calling for Germany to change course.
The Netherlands too
Economists estimate several hundred billion euros the investments needed to upgrade the infrastructure of the country and ensure the energy transition. Such a plan could all the more have a ripple effect at the European level as the Netherlands, which also has budgetary room for maneuver, are about to unlock $ 50 billion to finance infrastructure and infrastructure. artificial intelligence.Article reserved for our subscribers Read also Central bankers (almost) disarmed to support the economy
However, the fragility of the ruling coalition in Germany does not favor courageous decision-making. It is unlikely that Angela Merkel will get a green light from her conservative wing to ease fiscal rules. Worse, it is not impossible that, caught in the throat at the industrial level, Berlin decided to lead, as between 2000 and 2008, a non-cooperative strategy vis-à-vis the rest of Europe.
To restore competitiveness and boost exports, Germany could opt for lower production costs, through lower charges or even wage austerity. Such a choice, of which France and Italy would be the first victims, would be deadly for the European economy.