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Is Germany about to crash the EU?

Jasmine Birtles 9th Apr 2024 No Comments

Europe’s economies are in trouble. Growth is faltering, budget deficits explode, prices are high and most of its governments seem unable and unwilling to make the cuts needed to balance the books at all.

Forecasts for German economic growth were revised down last month, now assuming 0.1% GDP growth. France, the second-largest economy in the European Union, has lost the economic plot. It now has debt levels exceeding 100% of GDP (like the UK). This is the situation also for Greece, Italy, Portugal, Spain and Belgium.

Basically, Western European countries are largely on an unsustainable economic trajectory, with a growing gap between government spending and income. Voters demand ever more services and benefits but tax-take and production cannot keep up with these demands.

Tyler Durden at ZreoHedge says that France is at the epicentre of the EU’s impending financial doom. He points out that “France and Italy are major disasters right now on the budget deficit rule. France has a budget deficit of 7 percent and Italy 5 percent. France needs to reduce its deficit by a whopping 4 percent of GDP! Neither Italy nor Greece should never have been allowed in the EMU (European Monetary Union – Eurozone) in the first place.”

Germany – the sick man of Europe

However, that is not what my second Tin Hat Money Podcast guest thinks.

John is a co-editor of the Fortune and Freedom newsletter from Southbank Investments, and he points to Germany as the potential source of the EU’s coming existential crisis.

He says that Germany has shot itself in the foot so badly with its determination to use ‘sustainable’ power sources, rather than cheaper and more easily-available oil and gas, that it has materially and negatively affected its economy. The powerhouse of Europe which seemed so successful and impregnable over the last five decades or more seems to be committing economic suicide.

As Germany largely funds the EU – particularly the ‘Club Med’ economies (Portugal, Greece, Italy etc) – or at least its citizens feel that they do, if Germany has to pull its funding out of the EU, or even just reduce it, this could mean the collapse of the EU.\

But are we really close to this?

Could the EU collapse immanently as Germany’s economy – and those of France and Italy – continue to falter?

See what John has to say and decide for yourself!

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Jasmine Birtles

Your money-making expert. Financial journalist, TV and radio personality.

Jasmine Birtles

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