Frankfurt (awp / dpa) – Germany must permanently suspend the rule of the brake on the public debt in order not to curb the recovery after the Covid-19 pandemic, claims Tuesday the head of the chancellery, Helge Braun, in the press .
“The debt brake will not be respected in the years to come, even with an otherwise strict spending discipline,” warns Mr. Braun, a friend of Chancellor Angela Merkel, in an article published by the business daily Handelsblatt .
Also, the lasting renunciation of the limitation to the deficits is a “strategic decision for the economic recovery”, just as it offers a “reliable framework for the investments”, argues Mr. Braun.
This will also avoid raising social security contributions “by the end of 2023” and making “tax increases”, he adds.
The debt brake rule, enshrined in the German constitution, normally prohibits the federal government from borrowing more than 0.35% of its GDP.
In exceptional circumstances, however, he may ask the Chamber of Deputies for authorization to exceed this threshold.
It happened in June when the country launched a 130 billion euro stimulus package for forward-looking investments and consumer revival, breaking down the debt brake rule after years of strict budgetary discipline.
These expenditures will cause 300 billion euros in new debt in 2020 and 2021 for the largest economy in the euro area, according to the Ministry of Finance.
Helge Braun is certainly opposed to the sustainable use of the exception linked to natural disasters as in 2020 and 2021, which would open a “door to a permanent relaxation of the debt rule”.
According to the head of the chancellery, on the other hand, it would be a question of “combining a strategy of stimulating the economy in Germany with an amendment to the Basic Law” making it possible to gradually return, after a few years, to the rule of the brake on indebtedness.
Despite an exceptional recourse to debt due to the pandemic, Germany is the least indebted country of the G7.
afp / ck
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