German chancellor Olaf Scholz reiterated his call for the country to relax its strict spending rules, pushing for Germany’s constitutional debt brake to be reformed immediately after national elections later this month.
“We need a reform of the debt brake in our constitution directly after the upcoming election,” Scholz told the Munich Security Conference on Saturday, Bloomberg reported.
The chancellor, who is currently trailing in the polls and at risk of being ousted from power following the snap election on Feb. 23, expressed confidence that Germany will have a parliamentary majority to loosen the debt brake. The debt brake is a constitutional requirement that limits the German federal government’s structural net borrowing to 0.35 percent of gross domestic product.
The Christian Democratic Union and its Bavarian sister party Christian Social Union (CDU/CSU) and the centrist Free Democratic Party (FDP) want to maintain the debt brake, while Scholz’s Social Democratic Party (SPD) and the Greens would like to see the constitutional limit on borrowing amended.
As well as making a pitch for loosening of Germany’s borrowing restrictions, Scholz used his appearance in Munich to press for increased defense spending, and an overhaul of European debt rules.
Scholz said the European Union’s stability and growth pact should be overhauled to exempt defense spending that exceeds the NATO target of 2 percent. The rule change would be “temporary” while maintaining fiscal discipline, he said.
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