Economic Expert Calls for Large Investment Package in Infrastructure, Education and Defense to Revitalize the German Economy and Strengthen Europe.
According to the economist Ulrike Malmendier, the next German government should implement a massive investment package in infrastructure, education and the green transformation of the economy, as well as significantly increase the country’s defense spending. “It has to happen now, really everything at once” she told the German news magazine Spiegel. “And that sounds as drastic as it is. Germany and Europe have no other chance. If we do not finally do our homework, we will be facing far worse than a year of economic stagnation. Then we will be talking about economic decline.”
Three things, Malmendier emphasized, need to happen quickly: the EU’s economic union must be finally completed, including a harmonized internal market with uniform standards and a genuine European capital market. “Only as a joint large market can the European countries catch up with the growth of the USA” she said. Second, long-term oriented investments are needed, “a large fund for infrastructure and binding minimum investments for education” according to the researcher. “And third, all EU countries must invest significantly more in their defense and that especially together organized.”
Malmendier, a professor at the University of California, Berkeley, is a member of the German government’s Council of Economic Advisers, known as the “Wirtschaftsweisen.” The council’s president, Monika Schnitzer, had recently publicly spoken out against the planned expansion of the German military’s special fund, worth 200 billion euros. For Malmendier, such a military package is “just the beginning.” Germany will have to permanently invest significantly more in its defense than two percent of its gross domestic product.
“More important to me, however, is that we think of the system behind it as a whole, EU-wide” Malmendier said. In a joint European defense, “there is a great economic opportunity, especially for Germany.” This would also show that “it is better together in Europe than alone.” According to her hope, defense policy could become a lever to make progress on other levels, such as a truly borderless capital market, a harmonized internal and labor market and perhaps even a well-designed banking union.