It seems to be the most emblematic -at least post -war -war -national increase in public spending at European level, and even before … under pressure, under the pressure of faster and greater increasing defense spending due to the deterioration of the Ukrainian front. The reason for loosening the debt brake in the Germanywhich was voted on March 19, 2025 in order to increase the national expenditure on the defense…
Before the first year of the “relaxed” debt brake implementation for the unlimited increase in defense expenditure -that is 2026 -has been implemented before the first year of “relaxed” brake publicitywithout formally disproved that The German Ministry under Lars Clingbel (SPD) with the Ministry of Finance. Defense, Boris Pistorius (also SPD) plan to exclude interest on debt burdens taken into account in the constitutional brake …
And this in order to close holes in Germany’s medium -term budget program by 2029, although this program -without these plans -was approved on… October 6, 2025 (ie seven days before the relevant publication) by the European Council.
It is for what German economists with whom Newsit.gr came into contact with no doubt emphasized How the Clingbuel -Pistorius plan contradicts the new fiscal rules of both Germany based on the “relaxed” debt brake and the EU based on the current January of Stability Pact and the EU.
However, this plan of the two leading social democrats in the CDU-CSU government (with the SPD), which leaked on October 13, probably did not fall from the … sky.
Nagel statements in Athens
It is worth noting that just five days before the relevant post (7.10.25) Also the Social Democrat (SPD) Head of the Central Bank of Germany (Vundesbank), Joachim Nagel, Speaking in Athens and specifically to the annual BSE General Assembly before the country’s political leadership. made two extremely important statements:
1. For the first time I publish in favor of a “common defense budget at European level”.
2. He made a statement of questioning the hitherto established relationship with defense spending with fiscal rules.
Here’s the statement of: “Do we need fiscal rules? (…) I believe that there is plenty of fiscal space even when we exclude existing fiscal rules (…) I believe that the media exists – the regulatory framework gives us a lot of space – so I think we need to have new budgetary rules for it. “
In contact with newsit.gr with its top executives BCTinterpreted Nugel’s above position as a turn to still “More flexibility”.
A prominent study amid summer vacation
But what does that mean? In Study by the Council of Economic Experts of the German Ministry of Finance, Klengbeil, which was published in politically … unsuspecting time and specifically early August 2025 One meets some positions that show that both the leaks in Handelsblatt on a Clingbel – Pistorians plan to “exclude” interest on defense from the German debt brake, as well as the public statements by the Bundesbank chief Nagel in Athens top of the iceberg which… title has The need for a new MINI – reform not only of the recently reformed German debt but even the escape clause from the European Stability Pact…
What is mentioned in this study? It is worth reading carefully:
- ‘In the future, It would be necessary to consider whether the debt borrowing is actually complying with total national and European fiscal rules And, if necessary, to determine the degree to which federal and state governments can accumulate debt. This could be combined with the distribution of the power of lending to the states as a whole among the individual states, which is already required under the new regulation. “
- “Legislative power (Bundestag) is now facing the task of establishing effective monitoring and coordination of budget with sufficient powers to ensure that federal and state governments keep the ceiling of expenditure. However, the “debt brake” should be more stringent if compliance with European requirements is to be ensured without effective budget surveillance. “
Flexibility in emergency
The Council of Experts of Social Democrat German Ministry of Finance, Calingbeil, was left not only to what should also be established in order to relax the constitutional debt brake, but also what should be done after … the loosening of the debt brake.
Subsequently the relevant thoughts of the foam of German economists:
- “Another point of criticism concerns the ability to address new political needs for action that have not been adequately tackled by fiscal policy in the past. This is, for example, delays in transport infrastructure or defense capabilities. If policy makers come to the conclusion that these needs cannot be met by the hierarchy of expenditure, government spending must be expanded. Neither the debt brake nor the restriction of the cost of spending under European fiscal rules exclude such an expansion. “
- “However, fiscal policy should combine the decision on costs by increasing taxes to cover additional costs”.
- “If there is an inevitable emergency that requires rapid intervention, an emergency may be issued, which will allow a temporary debt increase.”
- “This option still exists. The federal government has failed in its attempt to rebuild the unused emergency loans of the financial year 2022 to another use after the end of the year through a complementary decision on the budget. The Federal Constitutional Court considered this as a breach of the annual principle of the annual duration. However, he also held that the legislative power has a discretion when it determines whether there is a state of emergency and the appropriate measures to address it. “
- “A state of emergency can also be used for several years. The only requirement is that the state of emergency must be determined and justified separately for each year of continuing existence and that the necessary measures must be presented. At the end of the excellent situation, net lending must again comply with the formal limits. “
What do the “wise men” suggest
“The German Council of Economic Experts (under Chancellor Mertz) proposes the completion of the debt brake provisions with a transitional phase in the years immediately after the application of the exemption clause”, according to the same study.
“During this phase, the permissible structural deficit is likely to exceed the normal limit, but should be reduced steadily.
To justify this, the Council of Economic Experts points out the need for macroeconomic financial management after an event of a crisis.
However, it should be noted that the debt brake, by providing an expanded borrowing margin, is already taking into account the requirement that public budgets have a financial stabilizing effect.
Therefore, if financial hypocriticalization still exists after the end of a crisis situation, the expanded lending options are automatically available in the context of the debt brake.
The Constitution links the use of expanded lending options in case of emergency with the obligation to repay any debt exceeding the normal limit.
OR German Bundesbank (2024) suggests the Cancellation of repayment liabilities from previous emergencies if the debt index remains below the 60%threshold, both in the end and in the future economic planning.
In addition, the balances in the debt threshold check account resulting from the depreciation of the borrowing threshold could be offset by emergency loans. Given the objective of ensuring compliance with European credit limits, these proposals seem not problematic.
An alternative proposal proposes repayment as a percentage of GDP and not in absolute installments. This would allow circularly oriented repayments and would avoid advance charge of repayments, ”the same study concludes.