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Draghi, Smaghi and The German constitutional debt brake

If Schäuble really wants to follow Keynes’ advice, Germany should borrow more and focus less on others’ spending habits

Lorenzo Bini Smaghi, a former executive director at the European Central Bank, explains why Germany’s former finance minister’s recent push for a return to “normal” is misguided.

 ECB Presidents, Mario Draghi until October 2019 and then Christine Lagarde, repeatedly called for a more balanced and supportive fiscal policy to reduce the burden on the central bank.

The German constitutional debt brake, which was introduced in 2009, is particularly relevant in this respect, given it accounts for about a third of eurozone GDP

FT 14 June 2021


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