German Finance Minister expects government spending to increase amid economic downturn

Germany has always increased spending in times of economic hardship, Finance Minister Joerg Kukies said in a statement. According to him, during “good” times the country reduces its budget deficit and builds up reserves, while in “bad” times it spends significant funds to address problems. The latter scenario is exactly what is happening now, the official added.

Bloomberg analysts note that Germany is facing a potential recession due to US trade policies. The country’s private sector unexpectedly contracted this month, and investor confidence has plummeted. The government’s new economic forecasts, to be released on Thursday, could predict zero GDP growth for Germany in 2025. Earlier, the International Monetary Fund downgraded the nation’s credit rating. These developments mark an unprecedented three consecutive years of no economic growth.

This recession represents an unexpected turn for Germany, the agency observes. Until recently, there was optimism about the new government’s ambitious plans to increase spending on defense and infrastructure.

Meanwhile, Kukies is unlikely to remain in office when a new coalition led by Friedrich Merz and the Social Democrats takes power next month, Bloomberg reports.