In reverse gear

Calls for fiscal easing are likely to grow louder in view of the gloomy economic outlook. However, it may be harder than expected to find an answer: an infrastructure investment program will take some time to take effect and would have to struggle with ongoing capacity bottlenecks in the construction industry. A cash-for-clunkers rebate focused on promoting e-mobility could be quickly introduced, however, in view of the car scandals of recent years, such a step could be politically controversial and would also require a certain degree of legal and regulatory certainty. Tax cuts could also be implemented swiftly, but in an environment of increased uncertainty, there is a risk that the additional net income will be saved rather than spent.

 

Contact

Katharina Utermöhl
Allianz SE