Germany’s Structural Budget Problems

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Bloomberg (didn’t I once promise not to have anything more to do with them, oh well, needs must) have obtained a copy of German Finance Minister Hans Eichel’s budget plans for 2006. The problem is a serious one since the big problems are structural not cyclical:

“Given the availability of financial resources, an adequate public infrastructure and a sound education system with everything that accounts for Germany’s future viability can no longer be guaranteed”

The room for manouevre – whoever is elected in the autumn – is extremely limited since “nearly two thirds of next year’s 256 billion-euro budget are slated for debt-servicing, state pensions and unemployment benefits as well as jobless-placement costs”…(while)..”Germany’s three-year economic slump and near-record joblessness have eroded tax revenue”.

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About Edward Hugh

Edward 'the bonobo is a Catalan economist of British extraction. After being born, brought-up and educated in the United Kingdom, Edward subsequently settled in Barcelona where he has now lived for over 15 years. As a consequence Edward considers himself to be "Catalan by adoption". He has also to some extent been "adopted by Catalonia", since throughout the current economic crisis he has been a constant voice on TV, radio and in the press arguing in favor of the need for some kind of internal devaluation if Spain wants to stay inside the Euro. By inclination he is a macro economist, but his obsession with trying to understand the economic impact of demographic changes has often taken him far from home, off and away from the more tranquil and placid pastures of the dismal science, into the bracken and thicket of demography, anthropology, biology, sociology and systems theory. All of which has lead him to ask himself whether Thomas Wolfe was not in fact right when he asserted that the fact of the matter is "you can never go home again".