goodbye to the brake? Revolution for German public accounts –

Knowing Angela Merkel and her attention to the details of communication, it is impossible not to think that this is a maneuver studied at the table and coordinated in the execution. On the day when Merkel celebrates “the hour of multilateralism” at the Davos Forum and calls for joint action to counter the pandemic and relaunch the world economy, her right hand in the Chancellery, Helge Braun, launches a proposal in Germany that it is equivalent to a Copernican revolution, one of those Harte Wendungen, of which Paul Klee spoke and which mark German history.

So much so. In an editorial published in the Handelsblatt newspaper, Braun suggests that Berlin should abandon the constitutional limit imposed on debt, the so-called Schuldenbremse, which prescribes an insurmountable deficit of 0.35% in relation to GDP for every government. Enrolled in the Basic Law, the debt brake was suspended in the spring, faced with the need to massively increase public spending in support of the coronavirus-ravaged economy, but should be reactivated in 2022. The German government has in fact borrowed for 130 billion euros in 2020 and plans to do so for another 180 billion in the current one. It is the highest level of debt in the over 70 years of the Federal Republic’s life. “The Schuldenbremse – according to Braun – would not be sustainable in the next few years, even if we tried to be more disciplined in spending”. In what is called a “Pact for Germany”, the minister also proposes that until 2023 there are no tax increases and social contributions are frozen at the current level.

«It makes no sense – says the head of the chancellery – to suspend the Schuldenbremse ad hoc. It would be much more reasonable to link an economic recovery strategy with a constitutional amendment that provides for a reliable corridor for new debt, albeit on a decreasing scale and limited to a few years, also specifying a precise date to return to the debt brake rule ”.

It is difficult to underestimate the revolutionary significance of the proposal. In one fell swoop, Angela Merkel and her government take leave of the fiscal orthodoxy of the recent past and above all abandon the Schwarze Null totem, the balanced budget that has been a symbol of Germany’s stability in the last six years. So strong was the German faith in this philosophy of austerity that in the years of the crisis Merkel and her finance minister Wolfgang Schaeuble managed to force the EU countries to incorporate the objective of a structural budget balance in their respective Constitutions.

Predictably, Braun’s exit, clearly endorsed by the Chancellor, has already sparked an intense debate. Contrary voices have been raised within the CDU itself, starting with the spokesman for budget issues, Eckhardt Rehberg, according to whom it is a personal opinion: «The party continues to adhere to the debt brake rule. The cause of the euro crisis was excess debt ». Criticism also came from the leader of the liberals, Christian Lindner, who called Braun’s proposal “a fiscal capitulation”.

Approval instead by the Greens, probable future government allies of the CDU after the elections next September: “Well that Braun and the chancellery finally have the courage to tell the truth”, said the co-president of the ecologists Robert Habeck, according to which returning to the brake in 2022 would mean “making investments in climate, digitalisation, mobility and education impossible”.

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