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ANGELA MERKEL

Germans don’t trust Greece to tighten belt

Two thirds of Germans voiced doubt in a poll published Friday that heavily-indebted Greece is serious in its commitment to pare down its spending in order to receive a bailout and avoid bankruptcy.

Published: 10 February 2012 12:11 CET
Updated: 10 February 2012 13:30 CET
Germans don't trust Greece to tighten belt
Photo: DPA

Some 27 percent said they believed serious efforts would be made to implement austerity measures hammered out by rival Greek politicians, while 66 percent were sceptical, according to the poll for ZDF public television.

Nearly half of those asked said other eurozone countries should accept that Greece faced bankruptcy without further aid, while 62 percent expect that if that happens, the German economy will suffer as a result, it showed.

Eurozone finance ministers, unconvinced by the austerity package, have given Athens until next Wednesday to meet further conditions in return for €130 billion ($171 billion) in aid.

German Chancellor Angela Merkel also got an overwhelming thumbs-up for her handling of the eurozone’s debt crisis, with 69 percent judging her performance as basically good, the poll showed.

An earlier poll released Wednesday by the Forsa polling institute for Stern magazine revealed Merkel’s conservative Christian Democrats were at their most popular since winning a second term in 2009.

The survey on Greece was conducted by polling institute “Forschungsgruppe Wahlen” for ZDF between February 7 and 9 among 1,272 people.

German lawmakers will vote at the end of the month on the new multi-billion-euro rescue deal planned for Greece, a leading member of Merkel’s party said Friday.

“The Bundestag (lower house of parliament) will vote on Monday, February 27 on how the path now for Greece and the support proceeds,” said Volker Kauder, who heads the Christian Democrats’ parliamentary group.

“Our goal remains to help Greece but Greece must also keep its promises,” Kauder said.

Merkel met the heads of all the parliamentary parties early Friday to report back on efforts to agree a second bailout to save Athens from bankruptcy although a concrete deal has yet to emerge.

Merkel won two key votes on the eurozone debt crisis in parliament last year.

Frank-Walter Steinmeier, head of the Social Democrats parliamentary group, said: “It’s in nobody’s interest to refuse what is now necessary in Greece to prevent total collapse.”

AFP/bk

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ECONOMY

How is Denmark’s economy handling inflation and rate rises?

Denmark's economy is now expected to avoid a recession in the coming years, with fewer people losing their jobs than expected, despite high levels of inflation and rising interest rates, The Danish Economic Council has said in a new report.

Published: 30 May 2023 15:46 CEST
How is Denmark's economy handling inflation and rate rises?

The council, led by four university economics professors commonly referred to as “the wise men” or vismænd in Denmark, gave a much rosier picture of Denmark’s economy in its spring report, published on Tuesday, than it did in its autumn report last year. 

“We, like many others, are surprised by how employment continues to rise despite inflation and higher interest rates,” the chair or ‘chief wise man’,  Carl-Johan Dalgaard, said in a press release.

“A significant drop in energy prices and a very positive development in exports mean that things have gone better than feared, and as it looks now, the slowdown will therefore be more subdued than we estimated in the autumn.”

In the English summary of its report, the council noted that in the autumn, market expectations were that energy prices would remain at a high level, with “a real concern for energy supply shortages in the winter of 2022/23”.

That the slowdown has been more subdued, it continued was largely due to a significant drop in energy prices compared to the levels seen in late summer 2022, and compared to the market expectations for 2023.  

The council now expects Denmark’s GDP growth to slow to 1 percent in 2023 rather than for the economy to shrink by 0.2 percent, as it predicted in the autumn. 

In 2024, it expects the growth rate to remain the same as in 2003, with another year of 1 percent GDP growth. In its autumn report it expected weaker growth of 0.6 percent in 2024.

What is the outlook for employment? 

In the autumn, the expert group estimated that employment in Denmark would decrease by 100,000 people towards the end of the 2023, with employment in 2024  about 1 percent below the estimated structural level. 

Now, instead, it expects employment will fall by just 50,000 people by 2025.

What does the expert group’s outlook mean for interest rates and government spending? 

Denmark’s finance minister Nikolai Wammen came in for some gentle criticism, with the experts judging that “the 2023 Finance Act, which was adopted in May, should have been tighter”.  The current government’s fiscal policy, it concludes “has not contributed to countering domestic inflationary pressures”. 

The experts expect inflation to stay above 2 percent in 2023 and 2024 and not to fall below 2 percent until 2025. 

If the government decides to follow the council’s advice, the budget in 2024 will have to be at least as tight, if not tighter than that of 2023. 

“Fiscal policy in 2024 should not contribute to increasing demand pressure, rather the opposite,” they write. 

The council also questioned the evidence justifying abolishing the Great Prayer Day holiday, which Denmark’s government has claimed will permanently increase the labour supply by 8,500 full time workers. 

“The council assumes that the abolition of Great Prayer Day will have a short-term positive effect on the labour supply, while there is no evidence of a long-term effect.” 

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