Talking point
Germany’s fiscal position – too good to last
At a time when there are increasing voices demanding a more flexible interpretation of the Maastricht deficit rules, German Minister of Finance Wolfgang Schäuble has presented his budget plan, which does without any new federal debt between 2015 and 2018. This comes much to the chagrin of France, where his colleague Michel Sapin has been forced to admit that this year’s deficit will be at least 4.3% of GDP and that meeting the 3% target needs to be postponed for the third time until 2017 at the earliest. [more]
European integration
A future in the EU? Reconciling the ‘Brexit’ debate with a more modern EU
The future of the British EU membership has become one of the most pressing concerns for the EU. The EU-British relationship has always been one of special character but a number of recent developments have led to a ‘Brexit’ gaining momentum. Only the UK itself will be able to rationalise the domestic debate on EU membership. Economically, Britain and the EU are inextricably linked. Realistic estimates predict losses in the range of 1 to 3% of British GDP in case of a Brexit. Likewise, the Single Market would shrink by 15%. [more]
Germany
Progress needs broadband: Private investment requires more government stimuli
Besides transport and energy infrastructure, communications infrastructure is steadily gaining in importance in the regional competition to attract investment. One source of concern in particular though is the significant gulf in investment both between west German and east German federal states as well as between urban and rural regions. This is compounded by the problem that there is usually no viable business model for projects in rural areas without government subsidies. As there is no such thing as a standard blueprint for the broadband rollout with its huge investment requirements, every single project with its specific local features needs to undergo a critical economic feasibility analysis. On this basis, efforts should be taken to work out the best rollout model in terms of technology, funding and time horizon, respectively. In essence, the broadband rollout in Germany requires more government stimuli to foster private investment, but these efforts need to be coordinated and based on sound judgement. [more]
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