Perhaps Winston Churchill was right: "No people are more precise in their planning than the Germans, but equally no people can be more upset when their plans fail."
They suffer a compulsion to repeat: more austerity for anyone. To use the words of Olivier Blanchard on the Stability Pact: "I am no gambler, but I am willing to bet this will not happen. Almost surely, after a few years (some countries got a temporary break), the rules will prove unworkable. They can and probably will be adjusted, but it would have been better to get them right from the start."
Germany’s development model is no longer working. The numbers are there to tell. Inflation remains the highest in Europe: 3.2 percent with consumer goods still up 5 points. For Germans, inflation is a nightmare: The dramatic memories of the Weimar Republic still weigh heavily. So hoping the ECB will abandon austerity on rates-despite an obvious downward trajectory of inflation-is an illusion. Lagarde has made it clear: the picture remains uncertain. Isabel Schnabel confirmed it: until June, lowering rates is out of the question. Once again Germany wants to use the euro area and does so by imposing together with the frugal countries a stability pact that is not up to the challenges facing Europe. It is a mired Germany with less moral authority, exporting instability or resorting to accounting gimmicks. In the first half of 2023, more than 8,400 businesses closed in Germany. This has not happened in 20 years. As written by Eurointelligence: “Germany's own, much stricter, fiscal debt brake is also unworkable. There is no way Germany can ever meet its needs for investment and defence spending without a change in its domestic fiscal rules. We are not criticising the German constitutional court. The problem is not how we should interpret the law but the law itself.
The same is the problem with Stability Pact IV. The one big take-away message is that the euro area finance ministers still prioritise appearances over content, just as their predecessors have done. The Germans in particular seem to be very unafraid of another fiscal crisis”