Germany, against recession more debt without touching the constitutional brake
Finance Minister and hawk Lindner is ready for more debt by 2025, thanks to the flexibility provided by the rules, when the economy is doing worse than expected. And in the country, the debate on whether budget constraints should be reformed is reopened
3' min read
3' min read
Make more debt, without reforming the debt brake. This is the idea of the German Finance Minister, Christian Lindner, the leader of the Liberals who rigidly opposes the questioning of budget constraints in Germany, as well as common European debt.
Less growth, more debt
.According to his ministry's plans, revealed by Spiegel on 11 October, Germany's net borrowing will amount to EUR 56.5 billion next year, 5.2 billion more than estimated in the summer in the government's draft budget.
A greater recourse to loans is made possible by the slowdown of the economy, which is probably already in technical recession (two consecutive quarters of contraction) and which is set to close 2024 with a GDP decline of 0.2%, according to the new estimates just released by the Executive. A weaker trend than assumed in the draft budget, therefore, which opens up room for manoeuvre.
The new debt would be intended to compensate for the drop in tax revenues caused by the economic slowdown and the increased spending due to rising unemployment, but it will not (at least not entirely) solve the issue of the 12 billion hole in next year's financial manoeuvre, adopted by the coalition led by Olaf Scholz after weeks of clashes.
Lindner reiterates 'no' to Draghi: risks for common debt too high
