
Rodrigo Duterte Faces International Criminal Court for Human Rights Violations
Section: News
A major agreement has been reached regarding the substantial debt package amounting to up to EUR1.5 trillion or more, involving the Union, SPD, and Greens. Following extensive negotiations that lasted into the early hours, it has been decided that expenditures exceeding EUR43 billion annually for defense, intelligence, and civil protection will be exempt from the debt brake regulations. This exemption allows the upcoming government to significantly invest in the military, financing these initiatives through loans.
Additionally, a special debt fund amounting to EUR500 billion will be established, to be utilized over a span of 12 years for financing infrastructure projects such as new roads and bridges. A significant portion of this package, EUR100 billion, is earmarked for the Climate Protection Fund (KTF). The Bundestag is scheduled to officially vote on this XXL debt package on Tuesday, with political leaders expressing optimism about its potential impact.
Experts anticipate that this debt agreement will have various implications for the job market. Sectors such as construction, manufacturing, and defense are expected to see a surge in job opportunities due to increased demand resulting from additional funding. Hubertus Bardt, head of the IW Institute, has noted that defense companies may even hire workers from the automotive sector, where job cuts are occurring.
In terms of wages, there is an expected increase particularly in the construction and defense industries. Carsten Brzeski, chief economist at ING Bank, has indicated that labor shortages in these sectors may compel companies to offer higher salaries to attract talent.
However, analysts warn that this new debt package could trigger inflationary pressures. Brzeski asserted that increased orders and demand may lead to rising prices across various sectors. Furthermore, interest rates are projected to rise due to this debt initiative. Jörg Krämer, chief economist at Commerzbank, highlighted that the recent hike in interest rates for federal bonds has reached levels not seen since the early 1990s, with no peak in sight.
Consequently, housing costs may also rise, as construction loan rates have already increased by 0.5 percentage points. The Haus&Grund association predicts that rental prices could escalate by up to EUR80 per month or more, contingent on rising construction expenses.
On the stock market front, the German DAX index has shown a positive response, surging nearly 1.8% following the announcement of the debt package. Analysts note that this initiative is unprecedented in scale, with implications that could surpass those of previous economic developments.
Regarding taxation, the CDU has assured that there will be no immediate tax increases as a result of the debt package. Nevertheless, Reiner Holznagel, head of the Taxpayer's Federation, has cautioned that the new debt initiative must not lead to subsequent tax hikes.
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