Economist Ulrike Malmendier has warned that the policies of US President Donald Trump could lead to a global recession. “Trump’s zigzag course on tariffs is causing global uncertainty and that’s poison for entrepreneurial investments” said the economics professor at the University of California in an interview with the Funke-Mediengruppe (Thursday editions). “There is a serious risk of a recession – not just in the US. The scenario of a so-called Trumpcession, triggered by Trump, is a real possibility. This would have significant effects on Germany and Europe.”
Malmendier urged the German government to allocate a significant portion of the 500 billion special reserve for education. “If the money is used correctly, the special reserve can be a catalyst for a long-term growth path. This requires the money to be invested in long-term investments: in our infrastructure, in digitalization and a significant portion must also flow into education” she said. “Fatal would be to use the billions for election gifts like a higher commuter allowance or a new mother’s allowance. Then it would be a missed opportunity and we would remain in stagnation.”
The member of the Economic Advisory Council also advised the European Union to respond to Trump’s tariff policy by strengthening the internal market. Trade wars cannot be won, Malmendier said.