Merz Eyes Possible Debt Brake Reform Amid Growing CDU Pressure

Friedrich Merz, leader of Germany's conservative Christian Democrats (CDU), is considering reforming the debt brake amid internal party pressure. The CDU debates whether reforming the brake could permit higher investments, although Merz is wary of increased spending on welfare. The reform requires a broad parliamentary majority.

Friedrich Merz, head of Germany's conservative Christian Democrats (CDU), is contemplating a potential reform of the debt brake, which restricts the public deficit to 0.35% of GDP. This stance marks a shift for Merz, historically a staunch supporter of the constitutionally enshrined measure introduced by the CDU in 2009 under Angela Merkel's leadership. The debate was reignited within the party by Berlin's conservative mayor, Kai Wegner, as state premiers push for amendments due to fiscal constraints imposed by the debt brake.

In a recent event, Merz acknowledged the possibility of reforming the debt brake. He questioned the rationale and outcomes of such changes, expressing reluctance if reforms lead to increased consumption and welfare spending. Alternatively, Merz signaled openness if additional borrowing was directed towards boosting investment critical for progress, though he avoided delving into the technical details of the debt brake discussions.

The debt brake has been central to recent political shifts, contributing to the collapse of Germany's coalition government. This led to a snap election scheduled for February 23. Christian Lindner, leader of the Free Democrats, claimed his dismissal as finance minister by Social Democrat Chancellor Olaf Scholz was linked to disagreements over the debt brake. Altering the policy would necessitate a substantial parliamentary majority in both houses.

(With inputs from agencies.)