Financial Advisor Assesses Germany’s Debt Capacity
Jens Südekum, an economics professor and advisor to Finance Minister Lars Klingbeil, has expressed optimism regarding Germany’s ability to manage the government’s increased borrowing. In a recent interview with “Die Zeit” Südekum stated he is not overly concerned about the country’s debt ratio, predicting Germany will be in a significantly stronger financial position than other major industrial nations by 2040.
The current governing coalition has proposed authorizing nearly 850 billion euros in new debt during this legislative period. However, Südekum anticipates that this borrowing will stimulate economic growth, thereby mitigating the rise in the debt-to-GDP ratio.
“Currently, the estimated growth potential of the German economy is around 0.5 percent per year. I believe that with a determined growth policy, we can increase it to 1.4 or 1.5 percent” explained Südekum, who teaches economics in Düsseldorf.
He further noted that increased economic growth would also ease the burden of debt servicing. “When the economy grows, tax revenues also increase. This means more money is available to pay interest”.