Finance
Germany could keep top credit score despite vast spending plan, analyst says
Published by Global Banking and Finance Review
Posted on March 5, 2025
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Published by Global Banking and Finance Review
Posted on March 5, 2025
BERLIN (Reuters) - Germany could keep its top credit score despite a financial package worth hundreds of billions of euros planned by the parties hoping to form the country's next government, a Scope analyst told Reuters on Wednesday.
The conservatives and the Social Democrats (SPD) agreed on Tuesday to create a 500 billion euro ($536 billion)infrastructure fund and overhaul borrowing rules in a tectonic spending shift to revamp the military and revive growth in Europe's largest economy.
These measures could increase Germany's debt level to around 3.6 trillion euros or around 72% of gross domestic product by 2029, Scope analyst Eiko Sievert told Reuters.
This would be significantly higher than the 63% ratio reached at the end of 2024 but still below the previous high of 80% seen in 2010 following the global financial crisis.
"Back then, Germany was able to maintain its AAA rating," said Sievert. "Whether this remains possible in the coming years depends also on the implementation of necessary political reforms to strengthen competitiveness and economic growth."
However, Sievert warned that such special funds - which circumvent the country's constitutionally enshrined cap on borrowing - were no substitute for the political reforms needed to tackle structural problems, such as high energy prices and excessive red tape.
($1 = 0.9336 euros)
(Reporting by Rene Wagner, writing by Rachel More and Miranda Murray, editing by Madeline Chambers and Thomas Seythal)