Why Germany Wants to Loosen Its Debt Brake

Germany has decided on the largest debt package in its history. The Bundestag agreed to an erosion of the debt brake in favour of higher defence expenditures and an enormous infrastructure special assets. The huge package of measures represents the departure from the previous budget policy. On Tuesday, the necessary two-thirds majority was achieved to amend the Basic Law, as Bundestag President Bärbel Bas announced after counting the vote. After…

Learn how China uses debt as a growth strategy and the differences in debt policy between Germany and China. Despite the diverging approaches, Germany can benefit from China's investment offensive and communication strategy.

According to the amendments to the Basic Law, a huge increase of more than one trillion euros in government debt will be possible in the coming years. Union and SPD thus gain new budgetary leeway – but even those are probably not enough.

CDU, CSU, SPD and Greens eliminate the German debt brake – at least in part. Friedrich Merz sees this as the first step towards a new defence of Europe.

Why Germany Wants to Loosen Its Debt Brake

The German Parliament is set to vote on Tuesday on a plan to loosen government borrowing limits in order to spend heavily on defense and infrastructure, in an effort to offset America’s pivot away from Europe and to lift the country out of years of economic stagnation. If the measure eventually becomes law, it will radically reorient Germany’s relationship to government debt — and, its authors hope, allow Germany to shoulder a more powerful lead…

The proposed amendment to the Basic Law makes it possible: this year, the future finance minister will have around 23 billion more available in the core budget.