Germany will struggle to loosen its debt break
My latest opinion piece for Reuters is out. It is inspired by a conversation I had about how there is a consensus forming among pundits that Germany will simply get rid of its debt brake and to increase government spending and boost growth again. This consensus seems to be driven by American and British pundits who (I think) simply don’t know what they are talking about. Here is a deep dive into what it takes to change the German debt brake…
Germany will struggle to loosen its debt break-Klement
Jan 15 - When Germans head to the polls on Feb. 23 to elect a new government, one of the key issues at stake will be the country’s so-called "debt brake," a constitutional amendment that significantly limits the country’s fiscal space.
The emerging consensus is that the next government will loosen this restrictive policy to allow for more investment, but the hurdles to doing so may be much higher than most observers realize.
Read the full article here: https://www.reuters.com/markets/europe/germany-will-struggle-loosen-its-debt-brake-klement-2025-01-15/
Excellent as always, but I'm not convinced the Greens would veto abolition or reform of the debt brake. They were the only major party that voted against it back in the day. Would they eat their words out of spite?
That said, I see zero chance the conservatives would abolish. Foolish austerity is in their DNA.
Richard Wolffe, the well known academic economist in the US, is saying that Germany's economic success was largely based on cheap oil from Russia. And that her recent economic stagnation has been self-inflicted by stopping that trade on orders from the US. But perhaps that was the best of two evils.