What Germany’s Election Result Means for Its Economy
Published On Feb 24, 2025, 2:54 PM
Friedrich Merz, leader of Germany's Christian Democratic Union, is poised to become the next chancellor following a recent election. His government faces major challenges, including a stagnant economy, potential tariffs from the US on exports, and constraints from strict government borrowing rules known as the debt brake. Relaxing these rules to enable increased spending on military and infrastructure will require substantial parliamentary support, which may be difficult to achieve given the election results. The German economy is at a crossroads, needing adjustments to stimulate growth while adhering to current fiscal policies.
Stock Forecasts
EWG
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With increased political instability and economic stagnation, essential industries may face pressure, but Merz's potential ability to adapt borrowing rules could positively influence infrastructure and military spending. However, the government's ability to enact these changes remains uncertain without a required two-thirds majority in Parliament.
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