Germans Shift in Favor of Looser Debt Rules Before Snap Election

(Bloomberg) -- A majority of Germans back loosening, or even scrapping, the country’s strict borrowing rules to allow the government to ramp up investment, according to a new poll, suggesting a shift in public opinion about the so-called “debt brake.”

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Asked if the mechanism should “remain unchanged in the future,” 46% of respondents to the Forsa survey for the German Council on Foreign Relations said they should be tweaked to “allow for higher debt to finance investments.” That’s up from 35% in November and 25% in July.

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The number of respondents who want the rules ditched completely was at 9% in the latest survey, the same as November and up from 7% in July. Those wanting them to remain unchanged dropped to 42%, from 55%.

Introduced after the 2007-08 financial crisis, the borrowing limits restrict annual net new debt taken on by the federal government to 0.35% of gross domestic product but can be loosened in times of national emergency like the Covid-19 pandemic.

They helped trigger the collapse of Olaf Scholz’s three-party coalition in November, when the chancellor fired his fiscally hawkish finance minister, Christian Lindner of the Free Democrats, who was resisting expanded borrowing.

Government debt has been one of the main issues in the campaign for Germany’s snap election on Feb. 23, along with irregular migration and Russia’s war on Ukraine.

“Germans seem to realize that the world of old certainties is no more,” Joseph de Weck and Shahin Vallée wrote in the DGAP report. “The next government can be sure of public support if it seeks a grand bargain combining savings in existing spending with a modernization of the debt brake.”

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While the poll-leading conservatives under Friedrich Merz and Lindner’s FDP broadly want to maintain the debt brake in its current form, Scholz’s Social Democrats and Vice Chancellor Robert Habeck’s Greens support loosening the rules to facilitate a huge increase in spending in areas like infrastructure and the military.

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