More Debt Is The New Normal

In Germany too.

Schulden

The govenment might not directly admit it but the days when they at least strove to reach a balanced budget (black zero) are over.

Germany’s spending to counter the coronavirus crisis and modernize its economy means the country shouldn’t return to a balanced budget anytime soon, according to a senior Finance Ministry official…

Chancellor Angela Merkel’s government abandoned its balanced-budget policy this year and is set to borrow about 218 billion euros ($258 billion). A deficit of more than 80 billion euros is set for next year to fight the fallout from the pandemic, people familiar with the matter have said…

Germany’s constitutional debt brake obliges the government to keep debt under control. In good times, the rule allows for a structural deficit of 0.35% of gross domestic product. In times of recession, new borrowing can go up in proportion with the economic decline.

“A balanced budget isn’t obligatory.”

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