German spending spree would not be enough to save Eurozone

Chris Papadopoullos
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Angela Merkel, chancellor of Germany, has insisted on a balanced budget for 2015
GERMAN fiscal stimulus would have a minimal impact on Eurozone growth, ratings agency Standard and Poors (S&P) have said.

Top figures, including Mario Draghi, the European Central Bank boss, and Christine Lagarde, the head of the International Monetary Fund have called on the Eurozone’s largest economy to boost spending.

With a balanced budget and low government debt, it is the only major Eurozone economy considered to have the ability to undertake big spending plans.

However, S&P yesterday said that if Germany increased public spending by one per cent of GDP in both 2015 and 2016, only 0.3 per cent would be added to Eurozone GDP by the end of 2016.

The size of the assumed stimulus package is on a par with those seen in other advanced economics such as the UK and US. S&P believes 210,000 jobs could be created, but this pales in comparison to the 18m unemployed Eurozone citizens.

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