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Germany’s Fiscal Turn: Structural Challenges, Political Risks, and European Spillover Effects

Author

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  • Christl Michael

    (Universidad Loyola Andalcuia, Avda. de las Universidades, 2, Sevilla, 41704, Spain)

Abstract

Germany’s €1 trillion fiscal package marks a major shift in its economic strategy, with significant implications for both national policy and the euro area. This article critically examines the potential consequences of the fiscal expansion for debt sustainability, financial stability, and European fiscal coordination. It argues that without accompanying structural reforms – particularly in taxation, public investment, and demographic policy – the shift risks weakening long-term stability and undermining fiscal credibility across the EU.

Suggested Citation

  • Christl Michael, 2025. "Germany’s Fiscal Turn: Structural Challenges, Political Risks, and European Spillover Effects," The Economists' Voice, De Gruyter, vol. 22(2), pages 223-236.
    • Handle: RePEc:bpj:evoice:v:22:y:2025:i:2:p:223-236:n:1003
    DOI: 10.1515/ev-2025-0020
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    Keywords

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    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt

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