Germany: Window of the Minister of Finance to exclude defence expenditure from the debt brake due to Ukraine

It does not rule out the possibility of excluding defence spending from its “brake”, the transitional (after the dismissal of Lindner) Federal Minister of Finance, Jerg Kukis (Jörg Kukies), speaking today (22.11.24), in Handelsblattt. More specifically, Cookie is talking about a “moderate reform” of the “sense debt”. The German Subic said that “the debt brake had positive results. Thanks to its solid public finances, Germany was able to cope with the coronavirus crisis with great vigor. The debt brake therefore ensures that budgetary discipline is maintained in good years and provides sufficient financial room for manoeuvre in times of crisis to be able to react. That is right in principle. Nevertheless, I think that moderate reform has meaning.” More specifically, Cookis that “there are many proposals, from the German Council of Economic Experts, from Bundesbank, from academics. We should examine them carefully and consider what makes sense in order to be able to finance the necessary long-term investments.” To Handelsblatt’s question about whether it would make sense to exclude defence spending from “sex debt”, Cookie replied by saying “I don’t want to judge individual measures now”. He pointed out that “one should consider what is realistic and about which there could also be political consensus. In my opinion, this would be a moderate, targeted reform.” “We have set clear priorities in the budget for 2024. This was necessary after the ruling of the Federal Constitutional Court. And in the draft budget for 2025, we also weighed what we can and cannot finance. The result was clear priorities for future investment,” he noted. Finally, Cookie said that “budget funds are limited. Even if we had no debt brake, we would be subject to European rules on debt. These also require prioritising priorities, because they limit the increase in state spending and require a healthy fiscal policy.