German Conservatives have rejected a call to ease debt limits

German Conservatives rejected a call for a relaxation of the constitutionally imposed limits on debt issuance by Helge Braun, chief of office of Chancellor Angela Merkel, her close ally. According to Braun, Berlin will not be able to comply with strict fiscal rules for several years. Braun's commentary for the economic daily Handelsblatt is the clearest sign so far that until recently the strictly disciplined German government is trying to gain space for freer spending after the crisis caused by the new coronavirus pandemic. Last year, it supported the economy with unprecedented stimulus packages. "Even in the coming years, it will not be possible to maintain the debt brake, even with strict discipline in spending," Braun wrote. He believes that Germany should temporarily lift the constitutional restriction on new debt for a few more years in order not to hinder the economic recovery. "This step is necessary and must be seen as a strategic decision for economic recovery," Braun said. Greater debt flexibility will allow the government to refrain from raising taxes or social security fees, he added. Last year, the German parliament suspended a rule for the COVID-19 pandemic for 2020 and 2021 that limits new federal government loans to 0.35% of gross domestic product (GDP). But Eckhardt Rehberg, Merkel's Conservative spokesman for budget issues in the lower house of parliament, said in response to Braun's comment that party members continued to abide by the debt brake and considered fiscal discipline an issue that was not being discussed. "The cause of the debt crisis in the eurozone was not too small, but too high debt," Rehberg said, calling Braun's proposal his "personal opinion." Christian Ploss, the leader of the CDU in Hamburg, also agrees that this rule must not be relaxed. "The CDU is on the side of fiscal prudence and it should stay that way," he said. Last year, Berlin took on a new net debt of 130.5 billion euros. This was his highest annual loan in post-war history. And this year, Finance Minister Olaf Scholz plans loans of up to 180 billion euros. Instead of continuing to introduce exceptions to the debt rules for individual years, Braun proposed that the constitution be amended to define a "reliably shrinking corridor" of new loans in the coming years and a "clear date for the return to the debt brake". Braun's proposal is remarkable given that debt rules have long been the pride of Merkel's center-right Christian Democratic Union, and this year is an election year. On September 26, the Germans will elect a new parliament and office, which will replace Merkel after 16 years.