The debt brake in Germany is in conflict with the demand for higher public investments in roads, schools, and daycare centers. This is the result of a study by the Bertelsmann Foundation, will be presenting on Monday in Gütersloh. The scientists to show how different levels of investment efforts have an impact on economic growth and state debt.
Should Germany be the level of investment is unchanged, would the average growth of the gross domestic product (GDP) by 2025, a year at 1.4 percent. Germany would, instead, like the other OECD countries invest an annual 3.3 instead of 2.2 percent of GDP, this would result in a GDP growth of 1.6 percent per year.
The study authors have calculated five models and came to the conclusion: “More helps more”. The researchers support the claim of a Commission of experts, set up by the former Minister of the economy Sigmar Gabriel. Accordingly, the state should be obliged to invest a fixed sum and, therefore, more in the streets and in public buildings than in the past.
At the conclusion of the study, a preferred calculation model, the cut on the 3.3-percent of the OECD countries is oriented, would Germany generate up to the year 2025 with a GDP growth of 1.6 per cent, to around 80 billion euros.
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According to the study, higher levels of investment lead in the short term to a worse balance in the state budget. In the long term, but the increased economy would have a positive impact on growth on the public finances. In all model calculations, the current debt-to-drops-to-GDP ratio from 70 percent to under 50 percent by the year 2025.
“stay back By the low public investment in Germany behind its economic possibilities, and sets the prosperity of the coming generations,” said Aart De Geus, Chairman and CEO of the Bertelsmann Foundation. A sustainable fiscal policy should not only focus on debt, “rather, the growth and welfare potential of the Federal Republic of Germany is to be promoted”.
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