OECD welcomes German plans to boost spending

The OECD on Wednesday welcomed Germany’s plans to boost government spending in infrastructure and training, saying it would boost growth across Europe.

With its flush public coffers, German Chancellor Angela Merkel’s new right-left coalition government has vowed to improve the nation’s creaking internet networks and spend more on education and life-long learning.

“We are talking about investing in early childhood education, in skills and education, in areas where Germany is lacking, which is the digital economy,” acting Organisation for Economic Cooperation and Development chief economist Alvaro Santos Pereira told an economic conference in the resort town of Cascais near Lisbon.

“They don’t have very good infrastructure in terms of broadband for example so they need to invest massively to improve their standing in the world,” he added.

“This is good news certainly for Germany because this will improve their growth potential but it is also excellent news for countries like Portugal,” he said, because it would lead to more export opportunities for Germany’s EU partners.

Merkel was earlier on Wednesday narrowly confirmed by the German parliament for her fourth, and likely final term, at the helm of Europe’s biggest economy, following half a year of post-election haggling.

But while her team is willing to loosen the purse strings to get Germany future-ready, there’s no question of taking on new debt.

As in previous years, the coalition partners have pledged to stick to a balanced budget.

The International Monetary Fund has long urged Germany to take advantage of its budget surplus to invest more in public infrastructure and boost growth.