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Dax rises 1.7% after Merz reached a deal with Greens for massive increase in state borrowing
- Merz’s party reached an agreement with the Greens for a massive increase in state borrowing, two sources close to the negotiations said.
- Merz needed Greens’ support to achieve the two thirds majority needed for the necessary constitutional changes.
- Merz wanted to secure the funds before the new parliament convenes on March 25 where they risk being blocked by an expanded contingent of far-right and far-left lawmakers.
- DAX index rose 1.7% following the news.
- Here are expert opinions on the development:
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Nicholas Rees, head of macro research at Monex Europe said they are still challenges to overcome despite Greens’ support.
“They’ve managed to get over the first hurdle. There are a lot of challenges still to come. In Germany it takes a long time to spend money. So, despite the fact markets are very optimistic right now, we think they’re going to be disappointed.”
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Chris Turner, Global head of markets at ING said the market expected the fiscal policy to go through.
“I think most of the market thought it (the fiscal reform) would go through. If we see confirmation today, rather than Tuesday, that it’s gone through, then we’re preempting some of the gains from next week.”
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Andreas Bruckner, BoFa European equity strategist said this is a welcome news for the market.
“The market of course loves this news because they need the Greens to push through this fiscal package.”
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