Tuesday, 27 October 2009

Taking a punt on growth

Germany’s new coalition government will be sworn in tomorrow after reaching some broad agreements on strategy that include Euro24 billion in tax reductions — Euros 9 billion more than Chancellor Angela Merkel promised during her election campaign. It all has the ring of the early Ronald Reagan supply side economics ring about it with the gamble very much based on the tax concessions promoting sufficient growth to increase tax revenues to the point where compensating expenditure cuts are not necessary down the track. It is daring stuff at a time when the country is only just emerging from recession and the government debt is already at record levels in the wake of the financial crisis
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