Dutch to profit from German bailout plan


Angela Merkel’s 50 billion euro plan for propping up the German economy might very well benefit the Netherlands, Z24 analyst Mathijs Bouman argues. The German Prime Minister’s plan consists mainly of Keynesian measures that should let money trickle up: tax cuts and insurance premiums cuts and inceased child support are all part of it. There will also be a car wrecking premium of 2,500 euro for cars older than 9 years which is supposed to help the famous German car industry, but which also sounds like a recipe for car theft to me. Still, I guess it is a lot better than giving the money straight to the people who got us into this mess, as some countries do.

According to Bouman, similar measures would be less useful for the Netherlands, since we are a trading country and much of the money our government would pump into the economy would simply flow across the border. However, Germans spend much of their money domestically, but Bouman believes that still plenty of it will end up abroad. And with 25% of all Dutch trade conducted with its large neighbour Germany, Bouman figures that plenty of the German bailout cash will end up here.

Bouman quotes economist Wim Suyker of the Centraal Planbureau (CPB) who estimates that a 50 billion euro plan in Germany leads to a growth of 0.6% of the Dutch economy.

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