MNI BRIEF: Big Debt Brake Reform Need For Defence - Bundesbank
MNI (LONDON) - Germany should change the debt brake to allow borrowing up to 1.4% of GDP, rather than the current 0.35% maximum, the Bundesbank said on Tuesday, allowing federal and state governments to spend an extra EUR 220 billion per year financed by loans by 2030, while also keeping below the 60% debt-to-GDP ratio demanded by the European Commission.
Incoming Chancellor Friedrich Merz has said he is prepared to help push through a massive defence spending package now in order to prevent being blocked by far-Left and far-Right parties in parliament after he takes office.
The Bundesbank "is expanding its reform proposals for the federal debt brake and is outlining a stability-oriented path for higher government investment. It is thus presenting a concept that supports necessary measures to strengthen infrastructure and defence and at the same time ensures long-term sustainable public finances in line with European requirements,” a statement said. Further details are published today in the Monthly Report.