FT News Briefing

Germany’s €60bn budget hole

Nov 29, 2023

11:03

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China's increasing debt defaulters and Germany's budget deficit due to a court ruling are analyzed. The implications of the ruling on green energy projects and the embarrassment for the chancellor are discussed. The growth of investment and expansion in Monterey, Northern Mexico, and why Mexico has become an attractive destination for manufacturing and investment are explored.

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Quick takeaways

A record number of Chinese people, approximately 8.5 million, have defaulted on their debt since the pandemic outbreak, reflecting the challenges faced by the Chinese economy.

A recent court ruling in Germany has created a budget crisis, leaving a massive 60 billion euro hole in the country's budget and posing uncertainties for Germany's economic model and investments in future technology.

Deep dives

Rising Defaults in Chinese Debt

Since the pandemic broke out, a record number of people in China, about 8.5 million, have defaulted on their debt. This is a significant increase from the 5.7 million defaulters before the pandemic. The defaulters, primarily between the ages of 18 and 59, have been blacklisted by authorities, leading to restrictions on various activities such as buying airline tickets or using mobile payment apps like Alipay. This surge in defaults reflects the challenges faced by the Chinese economy, including a slowdown in the property sector, low consumer confidence, and the inability to recover after extensive lockdowns.

Introduction

3min

Germany's Budget Crisis and the Implications for Green Energy Projects

4min

Investment and Expansion in Monterey, Northern Mexico

2min

The Rise of Mexico as an Attractive Investment Destination

3min

A record number of Chinese people have defaulted since the outbreak of the coronavirus pandemic, a court ruling in Germany has opened up a huge €60bn hole in the country’s budget, and the FT’s Christine Murray explains why Mexico is benefitting from companies rethinking their foreign investments.

Mentioned in this podcast:

Chinese people default in record numbers as economic crisis deepens

‘A house of cards’: court ruling leaves Olaf Scholz’s legacy in tatters

The city where Mexico’s nearshoring hype is becoming reality

Berkshire Hathaway’s Charlie Munger dies aged 99

The FT News Briefing is produced by Fiona Symon, Sonja Hutson, Kasia Broussalian and Marc Filippino. Additional help by Sam Giovinco, Peter Barber, Michael Lello, David da Silva and Gavin Kallmann. Our engineer is Monica Lopez. Topher Forhecz is the FT’s executive producer. The FT’s global head of audio is Cheryl Brumley. The show’s theme song is by Metaphor Music.

Read a transcript of this episode on FT.com

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