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Fitch Ratings Warns of Possible effect on Germany’s Credit Rating
(MENAFN) Fitch Ratings has issued a cautionary statement regarding Germany's 'AAA' credit rating, suggesting it may face long-term pressure if the country’s considerable increases in military and infrastructure expenditures are not offset by fiscal consolidation or sustained economic growth.
The credit rating agency published a report named ‘German Spending Plans Show Willingness to Use Fiscal Space for Geopolitical, Growth Challenges’, following the nation’s announcement of a significant change in its fiscal policy aimed at tackling geopolitical and economic obstacles.
Germany’s ruling coalition, headed by the Christian Democratic Union, its Bavarian counterpart the Christian Social Union, as well as the Social Democratic Party, has put forward major changes to the country’s fiscal structure, which include the establishment of a EURO500-billion infrastructure fund and boosted defense spending.
"We anticipate EURO900 billion to EURO1 trillion (21-23 percent of 2024 GDP) of additional government expenditure over the next decade," Fitch stated.
The fiscal deficit is expected to increase to 4-4.5 percent of GDP by 2027, up from 2.6 percent in 2024, whereas the nation’s debt-to-GDP rate could rise to 70 percent, the highest level between countries with a similar 'AAA' rating.
The credit rating agency published a report named ‘German Spending Plans Show Willingness to Use Fiscal Space for Geopolitical, Growth Challenges’, following the nation’s announcement of a significant change in its fiscal policy aimed at tackling geopolitical and economic obstacles.
Germany’s ruling coalition, headed by the Christian Democratic Union, its Bavarian counterpart the Christian Social Union, as well as the Social Democratic Party, has put forward major changes to the country’s fiscal structure, which include the establishment of a EURO500-billion infrastructure fund and boosted defense spending.
"We anticipate EURO900 billion to EURO1 trillion (21-23 percent of 2024 GDP) of additional government expenditure over the next decade," Fitch stated.
The fiscal deficit is expected to increase to 4-4.5 percent of GDP by 2027, up from 2.6 percent in 2024, whereas the nation’s debt-to-GDP rate could rise to 70 percent, the highest level between countries with a similar 'AAA' rating.
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