Germany's Conservative CDU Leader Open to Debt Brake Reform

By Andreas Rinke and Maria Martinez

BERLIN (Reuters) – The leader of Germany's conservative Christian Democrats (CDU), Friedrich Merz, stated he might be open to reforming the debt brake, which limits public deficits to 0.35% of GDP, under certain conditions.

Merz, who is the front-runner to become the next chancellor in a federal election, has previously insisted that Germany should adhere to the constitutionally enshrined debt brake, introduced by his party in 2009 during Angela Merkel's tenure.

This year, the discussion about reforming the debt brake was reignited within the CDU by Kai Wegner, Berlin's conservative mayor. Several influential CDU leaders from various regional governments are joining the call for reform, as the states are also bound by the debt brake.

There is increasing pressure within the party, with CDU state premiers urging Merz to incorporate reform plans into the election program during recent meetings.

"Of course it can be reformed," Merz remarked at an event on Wednesday. "The question is, why? For what purpose? What is the result of such a reform?"

Merz clarified that if the aim was to increase spending on consumption and welfare policies, he would oppose reform. However, he suggested that if additional borrowing would enhance investment and be pivotal for progress, "then the answer may be different," he added.

He pointed out that the debt brake is a technical matter and preferred to avoid an in-depth discussion on it at this moment.

The debt brake was implicated in the collapse of Germany's coalition government, leading to a snap election scheduled for February 23.

Christian Lindner, leader of the fiscally conservative Free Democrats, was dismissed as finance minister by Social Democrat Chancellor Olaf Scholz last week, claiming Scholz sought to pressure him into suspending the debt brake.

Any modification to the debt brake would necessitate a two-thirds majority in both the upper and lower houses of parliament.