A future government may be forced to legislate to lift its Schwarze Null, or black zero, debt brake.
This iron rule prevents the state budget balance straying into deficit, but since the pandemic there have been workarounds for this — temporary in name but suffering repeated legal tussles.
If any replacement coalition can command a two-thirds majority in the Bundestag, it may be forced to cross this previously unthinkable Rubicon.
Marcus Ashworth Bloomberg 11 november 2024
https://www.bloomberg.com/opinion/articles/2024-11-11/the-mighty-german-bund-is-losing-its-benchmark-shine
Germany’s Finance Minister Olaf Scholz has finally admitted economic reality and announced a temporary suspension of the country’s infamous debt brake — known as the Schwarze Null (Black Zero) rule, which insists on a budget balanced between fiscal spending and tax receipts.
Such temporary measures have a curious tendency to become permanent.
Marcus Ashworth Bloomberg 26 februari 2020
https://www.bloomberg.com/view/articles/2020-02-26/germany-s-infamous-black-zero-budget-rule-may-be-gone-forever
Will Opposition leader Friedrich Merz get Germany to abandon its fiscal fetish?
On paper, the man widely seen as Germany’s next chancellor is fully committed to the “debt brake” that places strict caps on government borrowing
But Friedrich Merz, leader of the opposition Christian Democratic Union that is topping opinion polls ahead of snap elections, could quickly find the fiscal straitjacket too suffocating.
The implosion of Scholz’s three-way government has prompted fresh questions at home and also in Europe, where Germany has long played the role of fiscal policeman, about the wisdom of the debt brake.
Financial Times11 November 2024
Germany adopted its rule of maximum debt, known as the "debt brake" (Schuldenbremse), in 2009.
This fiscal rule was enacted by the First Merkel cabinet
EU har en motsvarande regel, Stabilitetspakten, senare utan större ändringar omdöpt till Stabilitets och tillväxtpakten (Stabpact)
Romano Prodi, Commission president from 1999 to 2004, asserted in October 2002 that the stability pact was “stupid” because it provided for sanctions on countries already in financial difficulties.
When the euro was born everyone knew that sooner or later a crisis would occur. It was also clear that the stability and growth pact was – as I have said before – “stupid”
Romano Prodi FT May 20 2010
Prodi: It is politically impossible to propose that now. But some day there will be a crisis and new instruments will be created."
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