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Can Germans Get Over Their Allergy to Stimulus Before It’s Too Late?

Merkel’s government has began debating measures, but needs to curry public support.



Photographer: Akos Stiller/Bloomberg

“Economic stimulus” is something of a dirty phrase in German policy circles. Since a splurge when the country reunified in 1990, the government has only once deliberately ramped up spending to revive growth. That was in the aftermath of the 2008 financial crisis, when Berlin unleashed a €50 billion ($56 billion) package that included subsidies for car buyers and support for companies struggling to make payroll.

Now pressure is building both at home and abroad for the famously frugal Germans to open the purse strings once more. After a drop in orders for cars and industrial equipment this summer, as well as a string of disappointing corporate earnings reports, the Bundesbank issued a warning on Aug. 19 that Europe’s largest economy could be about to tip into a technical recession (two consecutive quarters of negative growth).