German scholars positive about Trump investment plans | Business| Economy and finance news from a German perspective | DW | 28.11.2016
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German scholars positive about Trump investment plans

The majority of German economics professors believes the US president-elect's investment plans will have a positive impact on the US economy, if implemented. But tax cuts are seen as counter-productive.

A large majority of German economics professors are confident that Donald Trump's planned investment policy will be a blessing for the US economy.

Germany's renowned economic think tank Ifo polled 130 German scholars to find out their views on the president-elect's planned economic policy, and 80 percent of respondents believe that future investments will at least lead to a moderate stimulation of the US economy, based on Trump's announcement he would pump billions of dollars into the economy.

Among those polled, 75 percent said these investments would also boost employment over a longer period.

Not just praise

But the majority of German economics professors disagrees with Trump's vision that tax cuts would be the right thing to accompany billion-dollar investments. They argue that the opposite should happen, meaning that moderate tax increases should be used to finance the planned investments.

The scholars maintain that tax cuts - in combination with huge investments - would inevitably cause massive fresh borrowing and thus a heightened debt load.

The professors polled also think little of Trump's foreign trade agenda, with a third of respondents expecting a strong drive toward protectionism, and 61 percent seeing protectionism rise at least moderately.

The agree that a policy of levying higher tariffs on US imports would first and foremost harm export-oriented nations such as Germany.

"Limiting free trade and increasing public debt would be a bitter pill for the economy," the Ifo head for public finance and political economy, Niklas Potrafke, said in a statement.

hg/sgb (Reuters, dpa)

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