Germany's Debt Brake Dilemma: On the Verge of Reform

Friedrich Merz of Germany's CDU hints at possible debt brake reform amidst internal party pressure and upcoming elections. While open to reforms for investment purposes, Merz resists changes boosting consumption or welfare spending. The debate is a focal point following the coalition collapse and challenges from other political leaders.

Friedrich Merz, the leader of Germany's conservative Christian Democrats (CDU), suggested he might support reforms to the country's debt brake policy under certain conditions, amid pressure from his party and upcoming elections. The policy debate reignites as Merz's CDU prepares for a snap election on February 23.

Under growing internal demands, some CDU members see reforming the debt brake, which limits the public deficit to 0.35% of GDP, as necessary to allow for investment despite Merz's reluctance. Merz stated that while he isn't ready to delve into technical discussions of the brake, reform might be considered depending on its purpose and potential outcomes.

The debate follows the recent collapse of Germany's coalition government, partly attributed to the debt brake. Political figures like Christian Lindner, former finance minister, and Markus Soeder of CSU, voice differing views on managing Germany's fiscal policies. Reform would need a two-thirds parliamentary majority, making it a challenging political endeavor.

(With inputs from agencies.)