Economic expert cautions German coalition: Follow rules or step down

Economic Expert Veronika Grimm has warned the German coalition government against once again passing a potentially unconstitutional budget.

If it is not possible to reform the strict rules limiting budget deficits, known as the debt brake, "then a good democrat must have the ambition to follow the rules. Or step down," the economist from the Technical University of Nuremberg told Sunday's edition of the mass-circulation Bild newspaper in comments seen in advance by dpa.

The debt brake has been enshrined in the German constitution.

Grimm, one of the five members of the German Council of Economic Experts, commonly known as the "Five Sages," went on to say that the centre-left coalition must not put forward a vulnerable budget.

If new complaints against a coalition budget were to succeed before the Federal Constitutional Court, it would discredit the government.

It must not become a habit, she said, to "ignore the legal situation just because current rules are considered inconvenient or incorrect." Otherwise majorities must be organized to adjust the debt brake, she added.

In the past few days, the dispute among the three parties in the coalition over the 2025 federal budget has flared up again.

The background includes plans intended to reduce the funding gap in the budget by a total of €8 billion.

Finance Minister Christian Lindner of the pro-business Free Democrats (FDP) had commissioned expert opinions due to legal and economic concerns. These partially confirmed the concerns, but also showed ways to implement at least some of the measures.

By mid-August, Lindner, Chancellor Olaf Scholz of the Social Democrats (SPD) and Vice Chancellor Robert Habeck of the Greens aim to reach an agreement and secure a Cabinet decision.

Conservative opposition fears new budget tricks

According to Grimm, a relaxation of the debt brake would not be productive: "The additional leeway would be used up in no time, and the discussions would start all over again."

The economist warns: "If we are honest: it is not about €5 billion here or there. It must be about making structural adjustments to prepare the country for future challenges: The defence budget must increase, as well as spending on education in state budgets. And all this without losing debt sustainability."

Sebastian Brehm, financial and budget expert of the conservative opposition Christian Social Union (CSU) party, warned about new budget tricks by the federal government: "According to my information, preparations are under way in the Chancellor's Office to use new tricks to push the already maxed-out debt spiral even further.

"Apparently, they want to give the Autobahn company the opportunity to take on unlimited debt through sham revenue, such as from the toll on trucks."

He added that the government was aiming to conceal the actual level of national debt.