German finance minister warns of stagflation risk, pledges return to fiscal rigour

German Finance Minister Christian Lindner attends the weekly cabinet assembly at the Federal Chancellery in Berlin, Germany, June 8, 2022. REUTERS/Hannibal Hanschke

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BERLIN, June 13 (Reuters) – German Finance Minister Christian Lindner claimed there was a risk of a time period of substantial inflation and low development pursuing Russia’s invasion of Ukraine, which experienced driven already high inflation up even further however.

“Stagflation is a probable state of affairs,” he advised a convention of family members-owned companies in Berlin on Monday.

He mentioned the cost pressure could ideal be countered by unwinding the subsidies that experienced earlier been offered out to prop up the overall economy and that Germany and Europe had to return to fiscal self-discipline.

He additional that Germany’s constitutional financial debt brake, at present suspended, would occur again into drive subsequent yr. That would indicate a reduction in the stage of new borrowing from this year’s 140 billion euros ($146 billion) to just 10 billion euros.

($1 = .9591 euros)

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Reporting by Christian Kraemer composing by Thomas Escritt Modifying by Christoph Steitz

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