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

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.

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.

TikTok Returns To US App Stores 

TikTok is once again available for download in the Apple and Google app stores in the US, following a delay in the enforcement of its ban by former President Donald Trump. The ban’s postponement until April 5 gives the administration additional time to evaluate the situation.

Key Developments

The decision to restore TikTok access came after Google and Apple received reassurances from the Trump administration that they would not face legal consequences for reinstating the Chinese-owned app. According to Bloomberg, US Attorney General Pam Bondi sent a letter outlining these guarantees.

In an executive order signed on January 20, Trump instructed the attorney general not to take enforcement action for 75 days, providing time for his administration to determine how to proceed.

Uncertain Future For TikTok In The US

While TikTok is back on the US app stores, its long-term survival remains uncertain. If no deal is reached by early April to address national security concerns, the app may face another shutdown. ByteDance, the parent company, has insisted that TikTok is not for sale.

Legislation And Pressure On ByteDance

The Protecting Americans from Foreign Enemy-Controlled Apps Act, which passed with bipartisan support in Congress, mandates a nationwide ban on TikTok unless ByteDance sells its US operations. This law was signed by President Joe Biden in April of last year.

In late January, the app was briefly removed from US stores following the ban’s activation, impacting over 170 million American users. However, TikTok was restored soon after, following Trump’s intervention in his first hours as president. During that time, he signed an executive order allowing 75 days for a deal that would safeguard national security. Trump also suggested that the US could take a 50% stake in TikTok, a move he believed would keep the app “in good hands.”

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