The federal government has put pressure on Brussels for strict debt rules. Now she’ll probably have to ask for a delay herself.
Due to the poor economic situation, Germany is threatened with problems with the new European debt rules – despite compliance with the debt brake. The federal government is therefore considering asking the EU Commission for more time to adjust its spending, finance ministry circles said. Instead of a four-year plan, Germany could then draw up a seven-year budget plan.
The main reason for the problems is that only low growth is expected in the long term, even with optimal utilization of the German economy. In principle, German public finances remain solid thanks to compliance with the debt brake, the ministry emphasizes. However, a more ambitious financial and economic policy is necessary in order to reduce the debt ratio to the 60 percent of economic output enshrined in the European treaties. It was said in ministry circles that Germany absolutely wanted to comply with the new rules, also in order to serve as a role model.
According to EU debt rules, each member state of the European Union must draw up a four-year budget plan together with the EU Commission, which is responsible for supervision, in order to ensure sound finances. Under certain conditions, the plan can be extended to a maximum of seven years – although the country must commit to growth-promoting reforms and investments.
Source: Stern
