A Green Light for Public Investment
Europe urgently needs a fiscal-stimulus package aimed at bringing about much-needed economic transformation. But while the economic conditions for such an approach are favorable, the political conditions are less so, owing to the German and Dutch governments' misguided insistence on running large budget surpluses.
BERLIN/THE HAGUE – The eurozone faces immense economic challenges. Germany and the Netherlands – which together account for 35% of the monetary union’s GDP and have ample fiscal space – should take the lead in tackling them.
The biggest looming challenge – and not just for the eurozone – is the escalating climate crisis, which demands comprehensive economic restructuring, including an overhaul of energy systems, transport infrastructure, and agricultural practices. This process will be accompanied by another major challenge: adapting to the ongoing Fourth Industrial Revolution, characterized by the rapid development of disruptive technologies, such as artificial intelligence, nanotechnology, quantum computing, and network technology.
Such transformations do not happen by themselves. Governments must lead the way, by pursuing large-scale, coordinated, forward-looking public-investment programs.