German Chancellor Olaf Scholz has expressed his support for a reform of the country’s debt brake, a constitutional rule that limits public deficits to 0.35% of GDP. However, Scholz acknowledged that achieving this reform would require a two-thirds majority in both houses of parliament, making it a challenging task.
While Scholz’s coalition partner, the Free Democrats (FDP), have staunchly defended the debt brake, some state leaders from the opposition conservatives have shown openness to change. Scholz himself admitted that the current wording of the debt brake in the constitution may need to be revised.
Despite his support for reform, Scholz emphasized the importance of maintaining fiscal responsibility, especially in the upcoming 2025 budget. He highlighted the need to address economic challenges without resorting to amending the constitution.
Germany adhered to the debt brake in 2024 after suspending it for four consecutive years due to the pandemic and the energy crisis following Russia’s invasion of Ukraine. Scholz’s stance on the debt brake reflects the delicate balance between economic recovery and fiscal discipline.
As the debate on the debt brake continues, Scholz’s willingness to consider reform while upholding financial stability sets the stage for crucial discussions in the coming months. The outcome of these deliberations could shape Germany’s economic policies for years to come.