Germany's Budget Crisis Renews Calls to Reform Strict Borrowing Limits, Despite Conservative Opposition
-
Germany's budget crisis has renewed calls to reform the country's strict borrowing limits, even among opposition conservatives, to allow for more investment.
-
The constitutional court recently ruled against a budget maneuver to bypass debt rules, indicating Germany will have to stick more closely to borrowing limits.
-
This could constrain Germany's ability to respond to challenges like climate change and the Ukraine war at a time when the country already suffers from chronic underinvestment.
-
Reforming the debt brake would require changing the constitution with a two-thirds majority, which currently looks unlikely with opposition from Merz's CDU.
-
Conservative politicians are proposing narrow exemptions, like for defense spending, rather than fully rewriting the borrowing limits, to balance investment needs with fiscal restraint.