Heiner Flassbeck, Friederike Spiecker – Germany: Downturn in the economy and a simultaneous downturn in economic analysis

German Chancellor Olaf Scholz is not an economic expert. Nobody expects him to be. However, the head of government of the world’s fourth largest industrialised nation should have advisors to protect him from disqualifying himself in economic issues. He obviously does not have any such advisors. At a citizens’ discussion in East Germany, the Chancellor remarked that the lack of new housing construction was partly due to “a psychological problem caused by a rapid rise in interest rates in recent years”.

Either the chancellor believes that it is not the rise in interest rates as such that is a problem, but rather the psyche of those who want to borrow a few hundred thousand euros to buy or build a house or flat. Then he really can’t be helped. Or, he knows how problematic the rise in interest rates is, but doesn’t want to say it clearly because then he would have to deal with the ECB’s policy objectively, which he would like to avoid.

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