German debt to GDP ratio expected to fall below 60% next year

Discussion in 'Western Europe' started by kazenatsu, Apr 9, 2018.

  1. kazenatsu

    kazenatsu Well-Known Member Past Donor

    Joined:
    May 15, 2017
    Messages:
    34,608
    Likes Received:
    11,192
    Trophy Points:
    113
    http://www.spiegel.de/wirtschaft/so...ng-sinkt-2019-unter-60-prozent-a-1201557.html

    They're making a big deal about Germany's Debt to GDP ratio going below 60%, but all is not as great as it appears.

    This is a short term phenomena. Germany's debt has fallen because it has more people, so that automatically increases the tax base (not proportionally to the number of people it's important to point out, but there is an increase).

    However, in the long-term this added population is going to bring greater costs.
    You see, it's the young adult to middle aged segment of the population that increases the tax base, and that's what most (nearly all) of the immigrant influx has been. Once these immigrants begin to have children and start aging, it's going to be a different story.

    I've elaborated further about the issue in this thread: the problem with bringing in foreign workers to take care of the old


    Another thing that's important to point out, Germans are having to work more than they did 20 years ago to afford the rising cost of living. If you earn 10% more but the cost of living has gone up 30%, that's still reflected as a 10% increase in GDP, even though you as a worker don't have any additional money in your pocket. (Germans now spend a third of their income on housing)

    Obviously stuffing more people into the cities is putting a strain on apartments and making the prices go up.

    And companies are squeezing more out of their workers:
    Unpaid overtime a common phenomenon in Germany


    In 1991 Germany's debt to GDP ratio was 40%. Beginning about 2002 it began to increase, and rapidly increased beginning in 2008 (coinciding with the Recession and Greek Debt crisis).
    Finally in 2012 it began to slowly decrease.

    If the debt ratio goes below 60% it will be what it was in 2002.
     

Share This Page