The German state is becoming increasingly indebted – but how politicians should deal with it is a matter of ongoing debate within the traffic light government.
According to Federal Finance Minister Christian Lindner (FDP), federal spending on interest on loans has increased tenfold within two years – from around four billion euros in 2021 to around 40 billion euros in the current year. “This is money that is missing elsewhere,” said Lindner of the “Bild” newspaper. Against this background, he considers debates about suspending the debt brake to be “economically misguided”.
In the fight against inflation, the European Central Bank (ECB) has been continuously raising interest rates since the summer of 2022. This also increases the interest that the federal government has to pay for its loans in the form of federal bonds. For many years after the financial crisis of 2008, they were of little importance compared to today.
For ING chief economist Carsten Brzeski, the sharply rising costs of national debt are also due to the poor financial planning of Lindner’s predecessor, today’s Chancellor Olaf Scholz (SPD): “The federal government is now paying the price for not using the phase of negative interest rates, to cleverly restructure the debt,” Brzeski told the newspaper. “Most European countries were smarter and shifted to longer debts.”
I have been working in the news industry for over 6 years, first as a reporter and now as an editor. I have covered politics extensively, and my work has appeared in major newspapers and online news outlets around the world. In addition to my writing, I also contribute regularly to 24 Hours World.