To analyse. Russia’s 40% reduction in gas supplies in mid-June plunged Germany into a new phase of a crisis that began with Moscow’s aggression against Ukraine. The prospect of an energy shortage next winter has become more realistic than ever for Berlin. According to the Minister of the Economy, Robert Habeck, this crisis could be much more devastating for the country’s economy than that linked to Covid-19. For consumers and businesses, he warned, rising gas prices could be “exorbitant”.
Curiously, this considerable deterioration in the economic situation has not yet resulted in a change of tone at the Ministry of Finance. Christian Lindner, the leader of the liberal party who heads the institution, continues to count on a return of the “debt brake” from 2023. The minister has staked all his political credibility on respect for this rule, anchored in the Constitution. , which strictly limits the possibility of a structural public deficit to 0.35% of GDP. This means that Germany will in principle not be able to borrow more than 7.5 billion euros next year.
However, since his arrival at the ministry, Christian Lindner has multiplied the arrangements with the “debt brake”. From January, a budget balance of 60 billion euros, from a loan contracted to deal with the consequences of the pandemic, was transferred to a “climate fund”, which will help finance the development of renewable energies. A few months later, he agreed to the creation of a “special fund for the army” of 100 billion euros financed by the loan, which required a modification of the Constitution. This is an “off-budget” fund, i.e. it is not included in the 2022 finance law and therefore not taken into account in the calculation of the debt. Two sleight of hand criticized by the Christian Democratic opposition, which fears that these expenses escape the control of Parliament.
Impression of unfinished
The possibilities offered by the lifting of the “debt brake” have been largely exploited by the government: an additional budget providing for additional debt of 140 billion euros was voted in early June. That is 115 billion more than the Constitution would authorize if the “debt brake” had not been lifted.
All these measures, explain the liberals, are compromises negotiated with their coalition partners social democrats and Greens, and finance exceptional expenses linked to inflation and the Ukrainian crisis. But in 2023, warned Christian Lindner for European partners, this phase of “whatever the cost” in Germany will be over. Nor is there any question of resorting again to common European debt, tested in 2020 to deal with the consequences of the crisis linked to Covid-19.
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