Current Parliament could be a solution to reform Germany's debt brake

With more than a third of the seats in the future German parliament going to centrist parties, finding a supermajority capable of passing a reform of the public debt brake rule may have become an even more difficult task after Sunday's election result. To overcome this impasse, CDU leader Friedrich Merz has opened the door to an unexpected possibility: to push through the constitutional amendment using the current parliament, which will cease to be in office within a month.

This fallback solution put forward by the winner of this Sunday's elections reveals the sense of urgency that currently exists among most German politicians, both in relation to the German economy, which has been stagnant for more than two years , and with regard to the defense challenges brought about by the change in US strategy towards Europe.

In the coming years, the German state will need more budgetary space if it wants to invest more in its outdated infrastructure, spend more on defence or lower corporate taxes. To do this, it will need to reform the rule that limits the annual increase in public debt to 0.35% of gross domestic product (GDP), the so-called debt brake.

This is something on which Merz's CDU has been gradually moving closer to that of Olaf Scholz's SPD and Robert Habeck's Greens. During the election campaign, the conservative leader said for the first time that he might consider reforming the debt brake if the change was to allow more investment.

The problem is that, as a result of this Sunday's elections, the Bundestag has come to a conclusion that, instead of making a reform of this type simpler, may have actually complicated it.

It is true that the CDU (together with its traditional ally the CSU) won the elections, with the possibility of forming a majority coalition with the SPD on the table, but these two parties, even joining the Greens, no longer have more than two thirds of the deputies in Parliament, the number required to be able to make a change to the debt brake rule.

This happened mainly due to the growth of the far-right party Alternative for Germany (AfD), which firmly advocates that the State should not spend more than it receives, and that the debt brake should remain in place as it is.

On the left, Die Link is not an advocate of a debt brake, but it makes the approval of a reform conditional on increased investment and social support, refusing to accept that it would serve to increase defense spending.

With more than a third of the Bundestag members limiting their action on this issue, and in a great hurry to start taking measures ( aiming to have a government in place by Easter ), Friedrich Merz seems willing to risk an almost unprecedented solution.

This Monday, in statements to journalists, the CDU leader regretted that the AfD and Die Link had enough deputies to block constitutional changes, such as the one to be made to the debt brake, but made a point of remembering that it was still possible for the centrist parties to act within the current legislature, which only ends on March 24. In the current parliament, the CDU, SPD, Greens and Liberals have more than two thirds of the deputies.

“Before speculating publicly, let me talk about this with the Social Democrats, the Liberals and also the Greens over the next few days. We still have four weeks to think about this,” he said, adding, as quoted by the Financial Times , that the current Bundestag “can make decisions at any time”.

"The greatest care"

This solution has its problems. Several experts have highlighted the political and legal doubts that could arise from the fact that a parliament operating after the elections could make such important legislative changes.

Robert Habeck of the Greens has already expressed his willingness to approve a reform of the debt brake with the current parliament, but within the SPD there is less enthusiasm. Jörg Kukies, who is the current finance minister, said that such a change would send “a questionable political signal” and Olaf Scholz, the current chancellor, opted for caution. “If there is room for negotiations, everything can be discussed, but with the greatest care,” he said.