Germany under Merz: No economical "Swabian housewife" more?

Trump, Putin and an impending blocking minority of AfD and Linke in the new Bundestag could force election winners Merz to reform the debt brake. How that could happen.

The advance came from the outgoing Greens boss Robert Habeck and is probably to be understood as the “last big gesture” of the realo. The anxiety scenario: a defenseless Europe that Donald Trump and Wladimir Putin could be gripped. The next chancellor in Germany doesn’t want that either. Union chief said on election evening Friedrich Merz:

It will be “absolute priority for him to strengthen Europe step by step in such a way that we reach independence from the United States”. Habeck’s accommodation therefore immediately took up Merz on Monday: one Reform of the debt brake in the old Bundestag constellation.

Because in the new Bundestag AfD and Linke one Blocking minoritythat could be used when it comes to a new one Special fundi.e. investments from the debt breme. That was about the modernization of the Bundeswehr was necessary. The Union does not want to work with AfD and Left anyway; Second, it is unlikely that these debts would agree to upgrade. The left has explicitly clarified this.

Schäuble’s legacy

Contrary to the party line, Merz had no longer excluded a reform of the debt brake in the past few months. Sheis The legacy of the Black Finance Minister Wolfgang Schäublewho was only too happy to point out that his mother “Swabian housewife “and, according to the cliché, was first and foremost.

After Financial crisis Germany was afraid of the enormous public debt of European countries. The brake introduced in 2009 stipulates that the annual new debt must not be higher than 0.35 percent of economic output. There is no similar instrument in Austria – which is why Austria’s state debt ratio (2024: 83 percent) even the EU even threaten one Deficit procedure has forced.

But as clean as the black zero on the paper is: the result is a gigantic Investment backlog. For decades, it has hardly been invested in communities, infrastructure, digitization or the Bundeswehr.

The lack of investments were hardly noticeable in the 2010s – because, unlike today, the entire global economy quickly recovered after the financial crisis and gushed out the tax revenue. The debt brake was therefore also considered inviolable among other parties – especially for the FDPbut also that SPD. Chancellor Scholz was a advocate for a long time.

Reform proposals

There are enough reform proposals, even from conservative business institutes. The Bundesbank suggests the scope for the Increase borrowingnamely staggered – depending on how big the state debt is. For example on 1.5 percent of GDPas long as the state debt rate is among the 60 percent of GDP specified by the EU (in 2024 it was 63 percent). Another idea: one Transitional rule For the time after an emergency-related suspension of the debt brake-this was the case during Corona pandemic and Russia’s attack on Ukraine. Finally, a saving course that is too hard threatens to choke off the economic upswing after an economic degree.

One more possibility: precisely defined “Future investments” to a certain extent from the debt limit take out. However, this definition then depends on the subjective assessment of the parties.

Small reforms would even be possible without a two-thirds majority: namely a change in the calculation of the so-calledEconomic component. This enables economic developments to be taken into account in the public debt. If the economy is bad, the scope increases. The calculation is based on forecasts and is controversial. The Traffic light government Had that on her agenda, but never implemented.

Scholz hesitated, Union is disagreed

Time is pushing. The new Bundestag comes on at the latest March 25th together. Chancellor Scholz showed himself on Monday in the Willy-Brandt-Haus hesitant, Even if he had hardly had much to say about in the event of corresponding negotiations. It will probably be about a little satisfaction-after all, the miserable question of financing was the reason for the breakage of his traffic light coalition.

But the Union is disagree: the BavarianCSUwants to stay with your election promise, including North Rhine-Westphalia’s Prime Minister Hendrik Wüst advocated “to search the household on the savings potential”. Merz suddenly rowed back on Tuesday before the Union faction meeting; That is “A fairly extensive, difficult work that is to be done, “Merz is quoted.

The German population is already evident: in an Insa survey for t-online 49 percent spoke out for a loosening of the debt brake, 28 percent against it. Only in two parties more than half of the electorate vehemently rejects a reform: the AfD and the FDP.