Will the German debt brake be further loosened?
By partially excluding defense spending from the debt brake and creating a special fund for infrastructure, ...
Commerzbank Economic Research
09/08/2025
Debt brake already significantly loosened...
In the spring, the CDU/CSU and SPD, with the support of the Greens, significantly loosened the debt brake enshrined in the German constitution. Firstly, a special fund for infrastructure investments was approved, through which €500 billion can be raised on the financial market and spent over the next twelve years without this being counted towards the debt brake. Secondly, the portion of defense spending that exceeds 1% of GDP is no longer counted towards the debt brake. These changes will enable the federal government to take on new debt of €174 billion in the coming year, of which only a good €36 billion would have been permitted at the beginning of 2022 – i.e., before the special fund for the Bundeswehr, the German armed forces, was established.
... but still too strict for the government, ...
Despite this noticeable de facto loosening of the debt brake, the federal government is in financial straits. This is because the financial plan for the years 2027 to 2029, which was presented a few weeks ago, is obviously very tight. Even in its current form, the debt brake will be stretched to the limit, and the investment ratio in the core budget will be just over 10% in all years, which is just high enough to allow the use of the special fund's resources. Nevertheless, according to the government, in the years 2027-2029 there will be a total shortfall of more than €170 billion.
For full text see attached PDF-Version.
