The German Parliament Building, the Parliament Building, has been the seat of the federal government since 1999.
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German Central Bank president Joachim Nagel warned Thursday that U.S. tariffs could put Europe’s largest economy into a recession.
“We are in a world of tariffs now, and if the tariffs do come, we may expect a recession this year, if the tariffs do come.” Nagar said in an interview with the BBC Podcast.
Global tariffs will exacerbate what Nager calls the existing symptoms of Germany’s “stagnant economy,” which has been signed for two consecutive years, triggered by the energy crisis triggered by the remnants of the 19-19 pandemic and the three-year Russian sanctions against Russia’s three-year invasion of Ukraine.
Inflation and interest rates, months after they began to fall in the euro zone last year, returned to U.S. President Donald Trump’s high tariff strategy, designed to reduce the deficits between his country and trading partners, is rocking the market and breaking Europe’s strong relationship with Ally, traditionally.
Wednesday, the EU revenge The responsibility for 25% of steel and aluminum imports that took effect on the day was to begin in April, a series of anti-sponsorship campaigns that would affect 26 billion euros ($28.26 billion) of U.S. goods.
“This is not a good policy,” Nager said, lamenting that he is now facing the “structural change” of the entire world. “I hope that within the Trump administration there is an understanding that the price that must be paid is the highest price on the American side.”
As the world’s third largest exporterAccording to 2023 data and numbering the United States as the most important importer of goods, Germany is particularly vulnerable to tariffs, which could erode its automation and machinery sectors.
Brutally, good exports and services account for 43.4% of Germany’s GDP in 2023 According to World Bank dataAlthough Federal Office of Statistics It indicates that its usually higher foreign trade surplus has recently dropped to €16 billion in January, compared with €20.7 billion in December.
With EU countries able to relax their budgetary conditions and adapt to additional defense costs, the EU countries’ “re-business” plan reveals ongoing commitments revealed last week to assist Ukraine.
Fitch Rating Warning Thursday The initiative could mobilize nearly €800 billion in defense spending, which could reduce the EU’s current AAA rating headroom, as additional debts could be borne without causing direct downgrades.
Step on the “Debt Brake” pedal
Germany set the tone last week as Conservative Friedrich Merz, expected to serve as prime minister in the country’s upcoming ruling coalition, announced plans to overhaul the country’s so-called “debt brakes” to allow higher defense spending for higher defense spending – a rally inspiring Germany’s takeaway production and broader stocks.
The initiative, which combines a fiscal change proposal with a foundation fund of €500 billion infrastructure, has been resisted by the Greens – Meers’ conservatives and possible future alliance partner, the Social Democrats must require two-thirds of the significant votes in the bid to change the constitutional debt Brake.
Green official Britta Hasselmann marked “serious gaps and mistakes” in debt plans for projects such as climate change prevention before the parliamentary meeting debated potential reforms, according to comments reported by Reuters. Thursday’s meeting will only lead to a draft law, and the March 18 reading may be decisive for legislation.
In Wednesday’s notes, Deutsche Bank analysts retained the basic case of their reforms, ultimately experiencing “unlikely to be a smooth pass” in parliament next week, suggesting that “the proposal of compromise will not significantly change the expected fiscal stimulus, while 3-4% of the expected fee stimulus is in the final “final” based on 3-4% in 2027.
Analysts also considered the fiscal plan for the crack and immediately passed the defense and debt braking policy, and later adopted the infrastructure plan under the new parliament.
“This could change the composition of infrastructure packages and move it even harder toward social housing,” they noted.
