German 'Wumms' vs. French 'Relance' - who does it better?

In Germany, the consumer is at the heart of fiscal stimulus efforts: Around 25% of Germany’s fiscal “Wumms” -  i.e. the EUR130bn stimulus package put forward in early June - directly benefits households, with the vas t majority of these measures frontloaded, in the hope that it will boost consumer confidence and in turn unlock excess household savings at a crucial stage of the economy’s recovery from the Covid-19 shock.

France’s recovery strategy relies essentially on boosting supply rather than stimulating demand, thus the French stimulus package is more ambitious when it comes to dealing with the long-lasting supply side issues. Under the guise of stimulus to boost competitiveness innovation, the French government aims at pursuing the long-delayed structural reform agenda. 

Who goes greener? The German green stimulus is bigger in absolute terms, but the French is slightly larger in relation to GDP. In both packages, the flow of the expected green funds will only materialize over the coming years.

All in all, the French stimulus largely hinges on complex spending programs, while the German stimulus, with its strong focus on the demand side is likely to be better at boosting short-term activity.

Contact

Selin Ozyurt
Allianz Trade
Markus Zimmer
Allianz SE