Germany got $1 trillion for free, Deutsche Bank chairman says.
Germany is getting €1 trillion ($1.1 trillion) in additional funding virtually for free after bond markets reacted positively to its “historic” spending bill, Deutsche Bank AG Chairman Alexander Wynaendts said.
Germany last week unlocked hundreds of billions of euros in debt-financed defense and infrastructure spending, ending decades of austerity and ushering in a new period of deficit spending designed to boost Europe’s biggest economy, modernize creaking infrastructure and rebuild its defenses. Berlin was forced to act after President Donald Trump pulled back from US commitments to European security.
Wynaendts said that the sudden abundance of money carries the risk of misallocations after years of underinvestment in defense and disorganized procurement systems.
“Will there be investments not well spent? Absolutely yes, but we don’t have an alternative,” he said. Germany also must work on structural reforms to ensure that debt-fueled growth become lasting, he said.
“We need regulation reduction, we need tax reform, we need labor law reform. So there’s quite a lot of things that still have to happen for this enormous investment to have a full impact,” Wynaendts said. “We don’t have the time to squander this.”
Source: Fortune
