Abdelrahman
German Chancellor Advocates for Defense Spending Exemption from Debt Rules
In a recent interview following his address at the Munich Security Conference, German Chancellor Olaf Scholz emphasized the necessity for future administrations to establish a defense spending exemption within the framework of Germany’s constitutional limit on federal public debt.
Germany’s debt brake is enshrined in its constitution, compelling the nation to operate within its financial means. The debt brake can only be bypassed in extraordinary situations, allowing for the accumulation of new debt. Recently, Chancellor Scholz has voiced his support for suspending this debt regulation.
With upcoming elections on February 23, Scholz expressed confidence that the next government would implement necessary exemptions to the debt brake to accommodate increased defense spending. He stated, "It will be absolutely impossible to finance 2% and more without modifying our current debt regulations. It cannot be done." Scholz noted that while the current government has the funds available through an additional financial pool, this resource is set to expire in 2027.
Scholz cautioned against household budget cuts and tax hikes aimed at funding defense, deeming them ineffective strategies. He pointed out that numerous European nations are grappling with similar dilemmas regarding defense financing.
When asked about the duration of the proposed defense spending exemption, Scholz indicated it could be in effect "for an extended period or potentially permanently." He highlighted that while Germany’s debt-to-GDP ratio stands out among G7 nations—where only Germany remains below 100%—other countries like the US, Italy, and Japan have higher ratios.
"This is the situation we are confronted with. We possess the strength, capability, and economic resources to take necessary actions," he asserted.
In response to whether the German populace is prepared for the proposed increase in defense spending, Scholz confirmed that there is indeed wide support for expanding defense initiatives. However, he cautioned that if citizens believe such spending entails severe reductions in domestic investments, they are likely to resist the idea. This, he explained, underscores the need to adjust the debt brake to find a viable solution to these pressing challenges.
