Germany’s debt brake must be respected – finance minister

BERLIN (Reuters) – Germany’s debt brake must be respected, Finance Minister Christian Lindner told public broadcaster ARD on Tuesday, after a court ruling blew a 60-billion-euro ($64.92 billion) hole in the country finances.

“It must be respected and new detours must not be sought,” Lindner said, in an excerpt of the interview with ARD posted by the minister on social media platform X.

The debt brake, enshrined in the German constitution, restricts the public deficit to 0.35% of gross domestic product.

The German government decided to suspend the cap on borrowing this year after a ruling by the constitutional court blocked the repurposing of unused pandemic emergency funds.

According to Lindner, Germany faces a 17-billion-euro gap in its 2024 budget.

Lindner, leader of the fiscally conservative Free Democrats, is reluctant to agree to another suspension in 2024 and has ruled out tax increases to fill the gap.

“Tax increases make no sense. We are in recession. We need to strengthen the economy,” he said.

Chancellor Olaf Scholz of the Social Democrats and Economy Minister Robert Habeck of the Greens, whose parties have called for suspending the debt brake to allow more spending, are expected to hold talks with Lindner later Tuesday on the issue.

($1 = 0.9242 euros)

(Reporting by Maria Martinez and Christian Kraemer, Editing by Rachel More)