Why Germany must not make the same fiscal mistakes as the US

Donald Trump cut taxes for rich Americans, but Berlin should invest in modernisation

As long as Germany's economy was recovering well from the 2008 global financial crisis, policymakers had a coherent rationale for fiscal austerity. Rejecting other eurozone countries' constant urging that it undertake stimulus, Germany enshrined the national commitment to budget discipline in the 2009 "debt brake", which limits the federal structural deficit to 0.35% of GDP, and in the subsequent schwarze null ("black zero") policy of fully balancing the budget.

More German public spending, stimulus advocates argued, would reduce the country's huge current account surplus and fuel demand that would help other eurozone members, especially in southern Europe. But with Germany experiencing low unemployment and relatively strong growth, policymakers in Berlin were understandably afraid such measures would cause the domestic economy to overheat.