Germany’s economy will “markedly cool” in 2012 as demand for German goods in the U.S. is curbed by that country’s debt woes, said Peter Bofinger, an economic adviser to Chancellor Angela Merkel, the Rheinische Post newspaper said.
The U.S. government will probably accept no tax increases in an accord with Congress to raise the debt limit, Bofinger said in an interview published today. The compromise is flawed as a result, and will dent consumer spending and investment that spur demand for German imports, the Wuerzburg University academic was cited as saying.
“The U.S. government is hopelessly underfinanced,” with revenue accounting for just 31 percent of its gross domestic product compared with 45 percent in the euro region, Bofinger said, according to the newspaper.
“Without tax increases, which evidently President Obama can’t push through, the U.S. will go to the dogs,” Bofinger is cited as saying. In Germany, ‘these developments will unfortunately contribute to halting the economic upswing.”