German counselor Friedrich Mirz Al -Bundestag addresses a discussion about the federal budget for 2025 on September 17, 2025 in Berlin, Germany.
Nadja Wohlleben | Getty Images News | Gety pictures
The huge investment pledges and the main financial changes have strengthened hopes that Germany will give the eurozone economy a batch that is needed, but economists began to ask if-and when-this will happen.
Germany was a center of excitement earlier this year, as many politicians, analysts and economists participate Big hopes Economic recovery – locally and across Europe.
He was Go to the amendment The base of the long -term debt brakes, which limits the amount of debts that the government can take and dictate the size of the structural budget deficit of the federal government. Some defensive and security expenses are exempted on a specific threshold of debt brakes under the new rules.
The country also chose to create an infrastructure and climate investment fund 500 billion euros ($ 592 billion).
Consider the transformation a Change the possible game At that time, it was widely described as a way to transform the slow economy in Germany.
The country recorded annual cramps in 2023 and 2024, with 2025 also at a silent beginning. While the gross domestic product grew by 0.3 % in the first quarter, it reduced 0.3 % during the next three months, according to the latest. Data.
the Economy is the euro area On a wider scale, it also struggles, as it spread 0.6 % growth in the first quarter, although this slowed to only 0.1 % in the next three months.
European Central Bank Board of Directors Martins Casax CNBC earlier this month said that “great hope lies in Germany” when it comes to financial spending that strengthens the economy of the euro zone next year.
But it seems increasingly clear if this will pay its fruits.
“In Germany, it takes time to spend money.”
Holger Schmiding, chief economist in Bernberg, told CNBC that “a significant increase” in defense and infrastructure investment has started in Germany.
“(But) we do not see it strongly in the actual directing data yet,” he said.
“Everyone in all, everything is progressing as we expect after fixing the large debt brakes. Actual spending is slower than many of the most exciting critics that it expects. In Germany, it takes time to spend money.”
Meanwhile, Franzeska Palace, an economist in Europe, at Capital Economics, reported a “much higher deficit” in Germany over the coming years as a result of the pride of spending – along with some potential unexpected results.
She said: “Something that no one may notice a little is that the government not only raises defense and infrastructure, but also uses some additional financial space to finance other spending.”
This includes, for example, financing tax cuts on electricity for companies, but also covering the high pensions, health care and social benefits costs.
“Things such as electrical tax cuts still have a positive impact on the economy, but additional spending on health care and pensions will not enhance the economy because it reflects the high costs due to the population composition,” Palace pointed out.
While Palmas said that the changes will help the economy in Germany to grow in 2026, it warned that expansion may not be strong as many economists expect.
The minimum support?
The major German economic institutes have recently reduced Economic expectations For the country, it is now expected to grow slightly more than 1 % in the next year.
the The European Central Bank, at the same time, is He expected the euro area to grow by 1 % in 2026.
Schmieding from Berenberg calculates that the financial incentive in Germany will add about 0.3 percentage points to the country’s growth rate, which he says will strengthen the Euro region’s economy by 0.1 percentage points.
At the same time, Diamonds sees German growth adding about 0.2 % to the euro area in 2026.
Besides Germany, many other factors have been set to influence the growth of the euro area next year. These include the recent discounts in interest rates from the European Central Bank, according to Palmas, as well as the strong growth of SpainWhich was strengthened by the growth of immigration and employment.
“On the other hand, the US definitions are likely to be a small traction on the economy (we believe will be offered about 0.2 % of GDP),” she said. “And in FranceThe financial emphasis will also be tightened on growth. ”
But Germany’s recovery should have only had effects on gross domestic product.
He said: “Germany’s move from the small walk until mid -2014 to a great growth from late 2025, at rising, will have a modest positive impact on its neighbors. After all, Germany is usually the most important commercial partner for it.”
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