Box C: Will the Fiscal Push Bring BackGrowth in Germany

Ahmet Kaya () and Patricia Sánchez Juanino

National Institute Global Economic Outlook, 2025, issue 18, 36-41

Abstract: Germany is undergoing a significant shift in its fiscal policy following the approval of Chancellor-to-be Friedrich Merz's extraordinary stimulus plan by the German Federal Parliament. The fiscal plan, signed by German President Frank-Walter Steinmeier on 22 March, marks a specific relaxation of Germany's strict fiscal rules. It introduces a substantial debt-driven public spending programme to boost defence spending as well as infrastructure investments. This Box explores the macroeconomic effects of the plan using the National Institute’s Global Macroeconometric Model (NiGEM).

Date: 2025
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