Germany's new finance minister, Lars Klingbeil, announced a significant investment plan involving 1 trillion ($1.1 trillion) over the next decade for defense and infrastructure. This marks a departure from Germany's tradition of fiscal restraint, having suspended its constitutional debt brake. While seeking to stimulate growth through reduced regulatory burden and lower energy costs, this ambitious plan raises concerns about compliance with EU's Stability and Growth Pact, which limits member states' deficits and debt levels, potentially setting a perilous precedent for fiscal discipline in Europe.
Germany's pivot began in January, when the Bundestag suspended the country's constitutional debt brakeâa cornerstone of German economic orthodoxy for over a decade.
The scale of the plan now puts Germany on a collision course with the EU's fiscal framework. 'This sets a dangerous precedent,' warned Armin Steinbach.
Klingbeil laid out Berlin's plans to boost growth by cutting red tape, lowering energy costs and addressing labour shortages. 'All of this will lead to more growth and that's also positive for Europe,' he said.
Under the Stability and Growth Pact, member states are expected to keep deficits below 3% of GDP and debt below 60%.
Collection
[
|
...
]