Germany posted its biggest budget surplus since reunification in the first half of 2014, underscoring the strength of its finances at a time it faces growing pressure to loosen the fiscal reins and spend more to bolster growth in Europe.
The budget figures came as a detailed breakdown of German gross domestic product (GDP) data showed that a sharp decline in capital investments contributed to a 0.2 per cent contraction in the second quarter, further ammunition for critics who say Germany must do more to boost spending.
“In other European countries the figures will give confirmation to those who expect more fiscal policy impetus from Germany,” said Holger Sandte, an economist at Nordea Bank.
Partners like France and Italy have been urging Germany to allow greater fiscal leeway in Europe and take steps at home – such as cutting taxes and boosting public investment – to jumpstart the eurozone, which stalled in the second quarter. Last month, ECB President Mario Draghi appeared to back those calls, stressing the need for greater fiscal stimulus.