Dr. Lorenz Weimann
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Although US criticism of the German austerity package has faded since the G20 summit of 27/28 June, the “growth-friendly fiscal consolidation” planned by the industrial countries among the G20, without controls and sanctions, is not legally binding. Some Anglo-Saxon critics have already pinpointed the European austerity packages as the cause of a new recession. In the words of George Soros: “Europe faces almost inevitable recession next year and years of stagnation as policymakers’ response to the euro zone crisis caused a downward spiral”.
This discussion overlooks the fact that, quite like in the US, fiscal policy in Germany in 2010 is very expansionary and quite a few of the expansionary measures (above all the tax cuts) will remain in place beyond 2010. Even with the agreed austerity package (2011: 0.4% of GDP), the fiscal impulse in 2011 is substantially higher than in 2008.
Dr. Michael Heise