question archive Government intervention In Germany in 2009 There was considerable debate about the extent to which the government should be intervening in the economy
Government intervention In Germany in 2009 There was considerable debate about the extent to which the government should be intervening in the economy
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Government intervention In Germany in 2009 There was considerable debate about the extent to which the government should be intervening in the economy. For example, its citizens were worried about the future of Opel, a German car brand that was part of the ailing General Motors. Some wanted the government to make sure jobs were saved no matter what. Others, however, were more hesitant and worried about becoming the government becoming too interventionist. Traditionally since the Second World War the German government has seen itself as a referee in market issues and has avoided trying to control parts of the economy. It would regulate anti- competitive behaviour, for example, but not try to run many industries. However in the recession of 2009 when the economy was shrinking the government was forced to spend more to stimulate demand and had to intervene heavily to save the banking sector from collapse. The government also had to offer aid to businesses to keep them alive. Questions
3. What prompted greater intervension by the German government in 2009?
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Germany has been facing its largest economic interference since World War II.
- The modernization of eastern Germany has cost 70 billion dollars annually. By 2008, spending had fallen to 12 billion dollars.
- Germany is depleting the social security fund more rapidly by payroll taxes. High unemployment (9.5 percent) and a population that is aging.
- Germany has succeeded in getting its budget deficit below 3% of GDP.
