Financial expert warns of debt brake reform: Federal government must manage without additional debt

Financial expert warns of debt brake reform: Federal government must manage without additional debt

According to a report by www.faz.net, CDU leader Friedrich Merz commented on the debt brake in the ARD program “Report from Berlin”. He emphasized that despite the gaping gap in the federal government's finances, he did not want to change the debt brake. Merz argued that there is currently no emergency that would justify additional debt. Finance Minister Christian Lindner (FDP) also expressed skepticism about a renewed suspension of the debt brake.

A reallocation of 60 billion euros in Corona loans from the 2021 budget was declared null and void by the Federal Constitutional Court, causing a financial gap. This situation could lead to a reform of the debt brake, as it currently only allows new debt to a limited extent. However, such a reform would require a change to the Basic Law, which requires a two-thirds majority in the Bundestag and Bundesrat.

According to Friedrich Merz, a constitutional budget for 2024 is also possible without additional debt, as 22 billion euros in additional debt are already permitted next year. He emphasized that the federal government would have to make do with it.

The refusal to shake the debt brake could have an impact on the financial sector and the market. If there is no reform and the gap in the federal government's finances remains, this could lead to a more restrictive budget policy. Companies and consumers could therefore expect lower government spending and fewer investments. The uncertainty surrounding the debt brake could also lead to a more cautious approach to lending and investments by banks, which could have a negative impact on the economy.