Shafaqna English- Europe is bracing for a potential trade war after USA’s President-elect Trump takes office in January as its two largest economies are struggling. While Germany is heading into its second consecutive year of zero growth, France is expected to grow by less than 1% in 2025.
For example, France’s aggressive stimulus policies have already pushed its budget deficit to 6% of GDP, while its debt-to-GDP ratio has soared to 112%, up from 95% in 2015.
In 2023, the president, Emmanuel Macron, faced widespread protests over his decision to raise the retirement age from 62 to 64 – a move that, while meaningful, barely scratches the surface of the country’s fiscal challenges. As the European Central Bank President Christine Lagarde, recently warned, France’s fiscal trajectory is unsustainable without far-reaching reforms.
Heavy debt burdens impede GDP growth by limiting governments’ ability to respond to slowdowns and recessions. With a debt-to-GDP ratio of just 63%, Germany has ample room to revitalise its crumbling infrastructure and improve its underperforming education system.
Source: Guardian