German austerity is not only damaging the Eurozone, but is also starving the country of its own much needed investment

A common argument in the context of the Eurozone’s economic problems is that Germany should pursue a more expansive fiscal policy to help generate growth in the rest of the single currency area. Bob Hancké writes, however, that while such a strategy might be justified in terms of its wider effects across Europe, the German economy itself is also struggling from the pressures of restrictive spending policies. He argues that unless the country increases public investment there is a very real chance of Germany developing into a dysfunctional economy, with the only hope for growth residing in exports and citizens struggling with both low wage growth and spiralling income inequality.