Germany needs more stimulus for its own sake

Recent renewed calls for the German Government to take advantage of its fiscal room for manoeuvre in order to stimulate its economy have centred on the potentially beneficial effects on its weaker neighbours’ exports.

But last week’s German industrial production and trade figures underlined the fact that Germany needs more policy support for its own sake. Unfortunately, for now at least, the Government’s reluctance to provide such stimulus leaves the onus squarely on the ECB to support both Germany and its neighbours.