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Germany’s AAA Rating At Risk Unless Structural Weaknesses Are Addressed

by THEFUTURE.TEAM

January 28, 2025

Germany’s AAA credit rating could be at risk in the long term unless the country addresses its ongoing structural weaknesses, according to Eiko Sievert, CEO of European rating agency Scope Ratings, speaking to Reuters in an interview.

Key Facts

While weaker economic growth itself isn’t an immediate threat to Germany’s AAA rating—even if stagnation persists into 2025—the pressure on the rating could rise if the country fails to address the root causes of its underperformance.

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Germany’s economy shrank for the second consecutive year in 2024, with its export sector suffering from sluggish global demand and growing competition, particularly from China.

Sievert highlighted several structural issues that need urgent attention, including high energy prices that undermine Germany’s production and export capabilities, insufficient investment in infrastructure, education, and digitalisation, and the lack of meaningful labor market reforms that erode international competitiveness.

Despite Germany’s relatively low government debt, which stands at 63% of GDP, this figure alone won’t guarantee the country’s AAA rating, Sievert explained. The rating takes into account other important factors as well.

What To Follow

When compared to other AAA-rated countries, Germany’s debt level is relatively high. The average debt for other countries within this rating group is just 36% of GDP, making Germany the highest in terms of debt within the AAA cohort.

Germany’s “debt brake” mechanism, which limits public borrowing to 0.35% of GDP, remains a cornerstone of the country’s fiscal policy. However, Sievert suggested that reforming this mechanism to allow for more public investment aimed at driving growth would be a positive move.

“If Germany is to reverse the gradual erosion of its competitiveness, the next government must prioritize a significant increase in investment,” Sievert said, urging policymakers to act swiftly.

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EU Moderates Emissions While Sustaining Economic Momentum

by THEFUTURE.TEAM

November 15, 2025

The European Union witnessed a modest decline in greenhouse gas emissions in the second quarter of 2025, as reported by Eurostat. Emissions across the EU registered at 772 million tonnes of CO₂-equivalents, marking a 0.4 percent reduction from 775 million tonnes in the same period of 2024. Concurrently, the EU’s gross domestic product rose by 1.3 percent, reinforcing the ongoing decoupling between economic growth and environmental impact.

Sector-By-Sector Performance

Within the broader statistics on emissions by economic activity, the energy sector—specifically electricity, gas, steam, and air conditioning supply—experienced the most significant drop, declining by 2.9 percent. In comparison, the manufacturing sector and transportation and storage both achieved a 0.4 percent reduction. However, household emissions bucked the trend, increasing by 1.0 percent over the same period.

National Highlights And Notable Exceptions

Among EU member states, 12 reported a reduction in emissions, while 14 saw increases, and Estonia’s figures remained static. Notably, Slovenia, the Netherlands, and Finland recorded the most pronounced declines at 8.6 percent, 5.9 percent, and 4.2 percent respectively. Of the 12 countries reducing emissions, three—Finland, Germany, and Luxembourg—also experienced a contraction in GDP growth.

Dual Achievement: Environmental And Economic Goals

In an encouraging development, nine member states, including Cyprus, managed to lower their emissions while maintaining economic expansion. This dual achievement—reducing environmental impact while fostering economic activity—is a trend that has increasingly influenced EU climate policies. Other nations that successfully balanced these outcomes include Austria, Denmark, France, Italy, the Netherlands, Romania, Slovenia, and Sweden.

Conclusion

As the EU continues to navigate its climate commitments, these quarterly insights underscore a gradual yet significant shift toward balancing emissions reductions with robust economic growth. The evolving landscape highlights the critical need for sustainable strategies that not only mitigate environmental risks but also invigorate economic resilience.