A German economic expert, Veronika Grimm, has expressed concerns over the proposed debt package by the Union and SPD, calling it a “devil’s spiral” for the federal government and a “booster program for the AfD”. According to Grimm, the additional budget space of up to 30 billion euros per year, resulting from the changes to the debt brake and the new special fund, will likely be used for consumption, such as increased mother’s allowance, the reduction of the value-added tax on the food industry and the avoidance of reforms. This, she warns, will lead to a dangerous cycle where citizens become accustomed to benefits, but the state can only sustain them through ever-increasing debt.
Grimm also fears that the new debt packages will only ignite a “straw fire” economically, strengthening parties like the AfD in the long run. She predicts that the packages could lead to an additional growth of 0.6 or 0.7 percentage points in 2026 and 2027, but if there are no genuine structural reforms, such as in taxation, pension and bureaucracy, the production potential will not increase. By 2028, inflation is likely to rise again, Grimm said, describing this as a “brisk mixture” just before the next federal election, with little growth and high inflation, a “dangerous booster program for the AfD”.