Once upon a time
Once upon a time, the economies of Germany and France were considered the financial rocks upon which the eurozone’s stability rested.
Germany’s finances have looked considerably more strained ever since 16 federal states approved a historic loosening of the country’s debt borrowing rules in March.
The vote tore up Germany’s “Schuldenbremse”, which limited borrowing to 0.35pc of GDP a year, and paved the way for up to €1tn of debt-fuelled infrastructure and defence spending over the next decade.
The move, which marks a serious departure from Germany’s historically conservative fiscal policy, was described by Deutsche Bank economists as “one of the most historic paradigm shifts in German postwar history”.
Still, the constitutional tremors that have shaken Berlin are almost nothing compared to the political and economic earthquake that has rocked France to its very core, leaving it at risk of becoming the new sick man of Europe.
Engulfed by political turmoil and battling spiralling debts, Paris has had to contend with speculation long considered unthinkable. Will La République ultimately have to beg for an IMF bailout?
Kommentarer