Optimism by the German Companies

More optimistic than the authorities are the German companies, about the prospects of the economy. They warn, however, that the planned austerity measures would reverse the positive momentum of Europe’s largest economy. This view is shared by politicians, even within the government coalition parties. The German Chamber of Commerce (DIHK) announced that the German economy will grow by 3.4% this year.

“The recovery is extended almost on every sector of the economy”, said to the weekly newspaper «Der Spiegel» the head of the Chamber, Martin Vanslempen. “Businesses are investing again, and even consumption is recovering, thanks to favorable developments in the labor market”, he said.
Recently, the Bundesbank had upgraded its forecast for growth of the German economy to 3%. The government has also announced that will review the initial growth estimations of just 1.4%. Nevertheless, it has also warned that the economy most lileky will experience a decreased development rate in the second half, after the momentum of recovery in the second quarter- as the economy needs time to normalize before expanding again.

Companies appear to have more confidence in the prospects of growth and they do believe that the austerity measures are a threat. According to a report of «Der Spiegel», local governments as well as other strains belonging to the Christian Democrats of Chancellor Angela Merkel and its partners in the ruling coalition of Liberals, share the same estimations.

According to the publication of several state ministers of Land Infrastructure, they will formally express their opposition to cuts of 2.4 billion Euros, as this will endanger investments, jobs and tax revenue.
The government however insists on the path of fiscal discipline. The German finance minister, Wolfgang Soimple, said in an interview to the newspaper «Rheinische Post» that the budget deficit will fall below 60 billion Euros within 2010, compared to the original target of 65 billion, thanks to economic recovery.