Traditionally a champion of budgetary rigor, the German government will have to resort to borrowing again next year to finance a significant budget deficit, due to the continued impact of the Covid-19 pandemic, announced Friday August 20. German Finance Minister Olaf Scholz.
“We will also be forced next year to ask for an exception to the rule on the limitation of debt” public in Germany to finance the budget, and this “In order to use considerable resources to protect the health of citizens and stabilize the economy”, Scholz told regional press group Funke.
The rule to which the Social Democratic Minister refers is the one that the first European economy enshrined in its Constitution in 2011, called the “debt brake”: in principle it prohibits the federal government from borrowing more than $ 0 each year. , 35% of its gross domestic product.
In exceptional circumstances, however, the government may ask the Chamber of Deputies for authorization to exceed this threshold. This is what happened last spring when Berlin urgently released hundreds of billions of euros for its economy. The federal government then borrowed 218.5 billion euros.
The “zero deficit” policy put in brackets
Germany, which has accumulated budget surpluses in recent years, will therefore break for the second consecutive year with its orthodoxy in this area.
Angela Merkel’s government will also continue to put aside the other political line it had set itself: that of “Zero deficit” and the total absence of recourse to borrowing. “This is to be expected because of the evolution” of the pandemic, which continues, and its economic consequences, underlined the Minister of Finance, questioned on the possibility of recourse to the loan next year.
The country has been experiencing an upsurge in the number of cases of contamination for several weeks, notably linked to the return of tourists from abroad.
–
