Companies warn the new Government of Germany: “The economy is still stagnant”

German companies warn the possible new government of great coalition that do not have any tail wind in their favor as far as the economy is concerned. The most important advance indicator of Germany, known as IFO index, makes it clear: the economy of the European locomotive is still stagnant.

The business confidence indicator, published on Monday after an election day marked by a turn to conservatism with an ultra -right boom, has barely moved with respect to the month of January. Specifically, he closed February at 85.2 points, compared to 85.1 of the first month of the year.

Teuton entrepreneurs are very pessimistic with their evaluation of the current situation. The index of this component fell a point with respect to the previous month, staying in the 85 in February. It is true that expectations have improved something, since the elections already marked a change of course to the conservative right after this Sunday’s elections. Specifically, the index went from 84.3 points in January to February 85.4.

By sectors, in the manufacturer “the business climate has improved,” they say from the IFO in its statement. “Companies are remarkably less pessimistic about the coming months.” On the other hand, companies in the services sector, the current support of the German economy, seems to be “less satisfied” with the current situation and future expectations also worsened. “In particular, skepticism increased in the transport and logistics sector.” As for trade and construction, the result was more optimistic.

The president of the IFO, Clemens Fuest, said that both companies and consumers “are braking investment and spending because there is a lack of trust.” The expert reiterated that if coalition negotiations “do not last too long and the new government presents an agenda that inspires confidence, the situation could change in the second half of the year,” he reiterated in an interview for Bloomberg Televisión.

These data only confirm what has been said for some time, and that is that Germany is going through a kind of structural and non -cyclic problems in its economy. In the short term, Donald Trump’s tariffs and the increase in energy prices will continue to be a ballast for the largest economy in the old continent. Likewise, “the renewed geopolitical tensions and the change in posture of the US administration in terms of defense and security in Europe are probable, they weigh on consumer spending,” says the global chief of Macro of ING, Carsten Brzeski.

The view is now put in the dialogues that the future coalition maintains and the plans that will come out of these conversations, hoping that progress in economic matters and generates some confidence in the German business fabric.

In this sense, Fuest reiterated that there should be no greater difficulty, since social democrats and conservatives have already made coalitions in the past: “In terms of having a government capable of acting, this was the best possible result, he said.

The expert stressed that it was a “adjusted” result, but now “we have two parties that have cooperated in the past and that we hope they see the situation, the difficult situation of the country, and agree and form a stable government.”

What is clear is that no one is confident that Germany will recover in the short term. Bloomberg economist Martín AdeMmer reiterated in a comment that “the future of the economy will depend largely on the possible introduction of US tariffs and whether coalition negotiations after Sunday’s elections result in a stable government capable of addressing the pressing problems in the country.

Two years in a row in recession and a debt brake mechanism that does not allow to open more budget for investments are causing huge dilemmas when carrying out future economic policies. In fact, the central theme of this campaign was the modification of that brake on the debt that CDU conservatives, led by Friederich Merz, does not seem to want to suppress or modify.

“It was always suspected that the CDU/CSU would change its position on the debt brake after the elections. With the left and the green, there are now a two -thirds majority in the Parliament for direct changes in the debt brake, Although the left would not support such debate to increase defense spending, “Brzeski explains.

Since the debacle of the German economy began, all the experts consulted by the electionomista.es throughout these years have the same conclusions: investment is needed. This was clearly said, the president of the IFO: “We need new investments, innovation, more emerging companies and we also need more willingness to work to supply labor.”

Very necessary tax reform

Although many experts are too orthodox and are not clear more indebted. The market does see “margin to ask for more loans.”

But Ruet already said that it is not worth just borrowing. The expert reiterates that the tax policy of the next government “presents an act of almost impossible balance: tax cuts are needed to overcome economic stagnation, but a significantly greater defense expense is imperative” and that is why important reforms need to be applied in This matter to return growth to Germany.

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Companies warn the new Government of Germany: “The economy is still stagnant”