Germany's Debt Brake Faces Reform Debate Ahead of February Election

Political divisions over fiscal rules have triggered early elections, raising questions about the future of Germany’s constitutional spending cap.

Germany's 'debt brake,' a constitutional rule limiting structural deficits to 0.35% of GDP, is under scrutiny as economic challenges mount.
Chancellor Olaf Scholz's coalition government collapsed earlier this month due to disagreements over budgetary limits, leading to elections scheduled for February 23, 2025.
New Finance Minister Joerg Kukies supports moderate reforms to enable long-term investments while maintaining fiscal discipline under both national and EU rules.
Key political players, including the CDU’s Friedrich Merz and the Bundesbank, have signaled conditional openness to reforms that prioritize investment over increased consumption spending.
Any changes to the debt brake require a two-thirds parliamentary majority, but rising influence of far-right and hard-left parties could complicate future consensus.