BERLIN (Reuters) – German Finance Minister Olaf Scholz has drawn criticism from Chancellor Angela Merkel’s Tories with his proposal to suspend the debt brake enshrined in the Constitution in 2021 after scrapping it this year due to the coronavirus pandemic.
Scholz asked parliament in June to suspend the debt brake and allow record new borrowing of 217.8 billion euros ($258.14 billion) as Berlin tries to help businesses and consumers to recover more quickly from the COVID-19 pandemic.
Scholz, his centre-left Social Democrats’ chancellor candidate in next year’s federal election, said at an SPD event in Berlin on Wednesday evening that the government should also abandon the debt brake in 2021.
The move signals that he is trying to permanently steer Germany away from its image of Europe’s champion of austerity and becoming one of the eurozone’s biggest spenders ahead of the election.
But her proposal drew sharp criticism from Merkel’s chief budget legislator, Eckhardt Rehberg.
“The suspension of the debt brake must not become a habit. We need to get back to the usual debt limit as soon as possible,” Rehberg told Reuters on Thursday.
There was still no agreement within the coalition on whether the government should ask parliament to suspend the debt brake again in 2021 and allow increased spending, a- he declared.
“It’s the Bundestag that will pass the budget for 2021 in December, not the finance minister in August,” Rehberg said, pointing to signs that the economy was recovering and tax revenues were developing better than expected.
He made it clear, however, that Merkel’s CDU/CSU bloc does not want to trigger an austerity program in an election year.
“With such a statement, the chancellor candidate opens the race for additional spending,” said Otto Fricke, chief budget lawmaker for the business-friendly Free Democrats.
($1 = 0.8437 euros)
Reporting by Michael Nienaber; Editing by Michelle Martin and Madeline Chambers
