EU Commissioner Valdis Dombrovskis (EVP) has called for a relaxation of the debt brake in Germany to boost domestic demand. “The German debt brake appears to be more restrictive than the EU’s fiscal rules” the conservative politician told the Handelsblatt (Thursday edition). “We should discuss adjusting it to EU rules.”
Structural changes in the world economy are hitting Germany particularly hard, according to Dombrovskis. The country’s high dependence on exports is constraining its growth potential. As a countermeasure, he recommended increasing investments. Moreover, the federal government should shape the tax mix “more growth-friendly”, he said. Incentives for not working should be reduced, so that the number of worked hours can increase.
In the federal election campaign, the SPD and the Greens are calling for a reform of the debt brake, while the FDP is against it. The CDU’s chancellor candidate, Friedrich Merz, has openly shown support for it. The Union’s election program affirms its commitment to the debt brake, without mentioning any reforms in sight.