Germany needs fiscal stimulus. Here’s how to do it

ON AUGUST 19THGDP the Bundesbank warned that Germany could soon be in recession. The economy shrank in the second quarter of the year; two consecutive quarterly contractions are often taken to define a downturn. In June industrial production was 5.2% lower than a year earlier, the biggest fall in a decade. Some investors hope that the run of bad news will persuade Germany to overcome its deep-rooted suspicion of fiscal stimulus. Sure enough, a day before the central bank’s warning, Olaf Scholz, the finance minister, said the government could afford a hit to its finances of €50bn ($56bn)—about 1.4% of .Unfortunately Mr Scholz has shown little desire to use that money now. Chancellor Angela Merkel has said she sees no need. That is lamentable. The case for using fiscal stimulus to fight the downturn has recently become overwhelming.