BERLIN (Reuters) – Germany’s new Finance Minister Joerg Kukies believes a “realistic” reform of the debt brake is possible but political consensus is essential, he said at a interview published Friday in the daily Handelsblatt.
“We have to see what is realistic and what there could be a political consensus on,” Joerg Kukies told the German newspaper.
“In my opinion, it would be a moderate and targeted reform,” he added.
Political parties in Germany criticize these rules, which limit the public deficit to 0.35% of gross domestic product (GDP), considering them as an obstacle to growth, especially in the context of the war in Ukraine.
This disagreement over spending recently led to the fall of the government, after Chancellor Olaf Scholz fired former Finance Minister Christian Lindner, effectively ending the coalition between the Social Democratic Party (SPD), the Liberal- German Democrats (FDP) and the Greens.
Olaf Scholz also called for a “moderate reform” of the debt brake, stressing that additional spending on defense should not come at the expense of investments or social programs.
“We will not remove the debt brake. We don’t even want to remove it. But we want it to be more manageable,” Olaf Scholz said at an SPD rally in Berlin on Friday.
By 2028, Germany will have to spend 80 billion euros to meet NATO’s defense objective of 2% of GDP, almost 30 billion more than in the budget planned for 2025.
The debt brake is essential to maintain budgetary discipline during periods of growth, while providing room for maneuver in the event of a crisis, insisted Joerg Kukies.
It is nevertheless wise to examine the different proposals and assess which one can best finance the necessary long-term investment needs, he added.
The minister recalled that even without the debt brake, Germany must respect European budgetary rules.
Joerg Kukies has announced plans to ask for more time to submit Germany’s spending plans under new EU rules ahead of elections due in February.
(Reporting Andreas Rinke, edited by Miranda Murray and Maria Martinez; French version Noémie Naudin, edited by Kate Entringer)
**Given the competing demands on Germany’s finances, what trade-offs must be considered when debating potential reforms to the debt brake, and how can a balance be struck between economic growth, social welfare, and defence spending?**
## World Today News Exclusive: Debating Germany’s Debt Brake
**Welcome to World Today News, where we delve into the pressing issues shaping our world. Today, we’re joined by two esteemed guests to discuss Germany’s looming debate on reforming its debt brake.**
**Our guests are:**
* **Dr. Johanna Schmidt**, Professor of Economics at the University of Munich, renowned for her expertise on German fiscal policy.
* **Mr. Heinrich Weber**, Political Analyst specializing in German politics, known for his insightful commentary on party dynamics.
**Let’s begin by setting the stage.**
**Section 1: The Need for Reform**
**(To Dr. Schmidt):** The article mentions that political parties are criticizing the current debt brake rules, citing them as an obstacle to growth, especially in the wake of the Ukraine war. Can you elaborate on the arguments they make, and do you agree that the debt brake is hindering Germany’s economic potential?
**(To Mr. Weber):** The downfall of Germany’s previous coalition government highlights the deep divisions surrounding this issue. How do you see these differing viewpoints playing out in the upcoming elections, and what are the potential implications for future fiscal policy?
**Section 2: The Spectrum of Reform**
**(To Both Guests):** Finance Minister Kukies advocates for a “moderate and targeted” reform, while Chancellor Scholz emphasizes maintaining budgetary discipline. What specific reforms are currently being debated, and how do they differ in their potential impact on Germany’s economy and social programs?
**(Open Discussion):** Do you believe a ”moderate” reform can truly address the concerns of those advocating for more significant changes? What compromises might be necessary to achieve a politically feasible solution?
**Section 3: Balancing Defense Spending and Social Needs**
**(To Dr. Schmidt):** Germany has a substantial financial commitment to reach its NATO defence spending target. How can this be balanced with the need for investments in social programs and other crucial areas?
**(To Mr. Weber):** Public opinion plays a crucial role in shaping political decisions. How does the German public perceive the balance between defence spending and social welfare, and how might this influence the debate on debt brake reform?
**Section 4: The EU Context**
**(To Dr. Schmidt):** The article mentions that even without the debt brake, Germany must adhere to EU budgetary rules. How might the EU context constrain Germany’s options for reform, and what are the potential implications for other EU member states facing similar challenges?
**(Closing Remarks):**
**To Both Guests:** What do you see as the most likely outcome of this debate? Will Germany see a significant change to its debt brake rules, or will we witness a continuation of the current political stalemate?
**Thank you both for sharing your invaluable insights with us today. This is a crucial issue with far-reaching consequences for Germany and the wider European landscape, and we appreciate your contributions to this important conversation.**
