Government financial advisors issue caution against relaxing the debt limit restriction
In the face of a projected €172 billion fiscal gap by 2029 and sluggish economic growth, Germany is contemplating reforms to its strict debt brake rules [1]. The government has already eased some borrowing constraints for defense and infrastructure, but the debt brake remains in place for the core budget [1].
Political consensus for broader reforms may be sought in 2026 if spending cuts and economic recovery prove insufficient [1]. Economic advisors like Veronika Grimm of the Council of Economic Experts argue that while the government has borrowing capacity, it lacks liquidity, highlighting the need for a delicate balance between fiscal discipline and necessary investments [1].
Proposals for reform include adjusting EU fiscal guardrails and selectively exempting crucial public investments like infrastructure, education, and housing from borrowing limits [2][5]. This approach aims for sustainable, growth-supporting debt management. Some also suggest abolishing the EU's "debt sustainability safeguard" and "deficit resilience safeguard" to allow limited increases in debt ratios without raising the overall debt ceiling [2].
The German Ministry of Finance's scientific advisory board cautions against further easing of the debt brake, emphasizing the need for effective limitation of new debt [6]. The advisory board also suggests using the planned discussion on reforming the debt brake as an opportunity to improve its effectiveness [7].
The debate on how to reconcile Germany’s strong fiscal traditions with modern economic and investment needs continues. The SPD sees the debt brake as an investment brake and wants it eased, while the Union wants to maintain the rules as much as possible [8]. The independent scientific advisory board of the Ministry of Finance, including Ifo President Clemens Fuest, former economic expert Volker Wieland, and finance professor Thiess Büttner, are members of the commission tasked with developing proposals for reforming the debt brake by the end of the year [9].
Meanwhile, other matters unrelated to the debt brake reform are ongoing. Hamm has established a second weapons ban zone, and a court has ruled against a chief physician in a lawsuit regarding an abortion ban [10][11]. Additionally, a 21-year-old individual from Hamm was involved in a brawl, and concerns about violating EU guidelines due to excessive debt accumulation persist [12][13].
Germany is considering modifications to the strict debt brake rules in response to a €172 billion fiscal gap by 2029, with the aim of achieving a balance between fiscal discipline and necessary investments for growth, such as in business and finance sectors. Proposals for reform suggest adjusting EU fiscal guardrails and selectively exempting crucial public investments like infrastructure, education, and housing from borrowing limits to ensure sustainable debt management.
