EU can become a trendsetter and bolster world GDP

Subject

The global reach of Germany's fiscal scope.

Significance

The focus on euro-area debt fragility perhaps obscures the fact that the bloc and broader EU have strengthened their fiscal position. They can afford to take action in the face of the global and local economic slowdown. Public debt levels and budget deficits have shrunk since 2014, especially in Germany and the Netherlands, which enjoy substantial budget surpluses and moderate debt levels.

Impacts

• Action would prevent the EU from looking feeble and unable to respond to, let alone influence, shifts in global economic conditions.
• A change in perceptions of the EU and its capabilities might boost local and global sentiment, multiplying the influence of any stimulus.
• Illustrating Germany's global influence, it bought 89.4 billion of dollars of goods from China in 2018 and 57.7 billion dollars of US goods.