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The German parliament building, the Reichstag, which has been the Bundestag since 1999.
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US tariffs can push Europe’s largest economy to Recession, the German Central Bank President Joachim Nagel warned on Thursday when Berlin faced a discussion about the potential capital policy.
“We are now in the world with tariffs, so we can expect a recession this year when tariffs really go,” said Nagel, heading the Bundesbank and acts as a member of the European Central Bank’s governing council, BBC’s interview.
Global tariffs are set to strengthen the existing symptoms that Nagel called the “congestive economy” of Germany, which for two years signed a contract against the background of the COVID-19 pandemic artificial conquest and the energy crisis caused by Western sanctions on Russia for three years of invasion.
Only months after the inflation and interest rates began last year, which went to the eurozone, returning the tariff strategy of US President Donald Trump aimed at reducing the perceived deficit of his country with trading partners, the rapture of the markets and the destruction of the traditionally strong connection of Europe from its transatlant.
On Wednesday the European Union avenge Aluminum, which came into force on this day when in April, starting in April.
“This is not a good policy,” said Nagel, causing “tectonic changes” that are now facing the world as a whole. “I hope the Trump administration has an understanding that the price you need to pay is the highest on the side of Americans.”
As the third largest exporter in the worldAccording to 2023, and in numbering the US as the main importer of its goods, Germany is particularly vulnerable to tariffs, which can ruin its automatic and technical sectors.
Skarin, exports of good and services amounted to 43.4% of the gross domestic product in 2023, According to the World Bankalthough Federal statistics data Typically indicate foreign trade surplus, which has recently reduced to € 16 billion in January, compared to 20.7 billion euros in December.
The uncertainty under the guidance of tariffs comes at a time when EU countries can be set to weaken their budget lines and hold additional defense costs, as part of the “rear” bloc plan, which revealed last week amid uncertainty due to the US permanent commitment to assist Ukraine.
Fitch ratings Thursday warned About the initiative that can mobilize almost 800 billion euros for protection costs, risks lowering the AAA’s current reserve of the EU with a -watered debt, which can be taken.
Foot on the pedal “debt”
Last week, Germany set a tone when Friedrich Merz Conservatives, which is expected to become a chancellor in the future ruling coalition of the country, announced plans for major repairs of the national so-called “debt” to ensure higher expenses for defense-in step in German.
The initiative, which brings together proposals for financial changes from EUR 500 billion for the infrastructure, was met with the resistance of the green party Merz Conservatives and the probable future partners of the coalition, the Social Democrats, should dwell on two-thirds of the majority required to change the constitutional stretch.
On the eve of the session of the Parliament, discussing the potential reform, a high -ranking green official Britt Hasselman marked “serious gaps and mistakes in conception” on debt plans for subjects such as climate change, according to Reuters. The session on Thursday will only lead to the draft law, while reading March 18 will probably be decisive for the legislation.
In a note on Wednesday, Deutsche Bank analysts have retained their basic reform case, ending up experiencing what is “unlikely to be a smooth passage” in the next week, signaling that the “compromise proposal has not changed a significantly expected fiscal incentive of 3-4% conservatics, mostly.
Analysts also took into account the possibility of a split financial package with immediate undergoing defense and debt policy and later adoption of infrastructure plans within the new parliament.
“This can potentially change the composition of the infrastructure package and send it more to social housing,” they noted.
