How high should sovereign debt be and to what extent should governments bind themselves to rules – these are the questions on which deep rifts run through Europe. Many economists, especially those influenced by Anglo-Saxon thinking, often from countries with high public debt, look at the current debate in Germany with considerable astonishment. With a national debt of only around 65 percent of gross domestic product (GDP), the government of Europe's largest economy still has a lot of fiscal room for manoeuvre, in its opinion.
Economic correspondent for Italy and Greece.
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Business correspondent in Paris
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The discussions always erupt particularly fiercely when Germany fails as a growth engine in Europe, as it is now, and thus also slows down other countries. The fight against climate change, which can only work across borders, and the current wars are further exacerbating the contradictions.
In Germany, the debt issue is morally exaggerated, is one of the accusations after the budget ruling of the Federal Constitutional Court in mid-November, not least because of the culturally relevant reference to the fact that in German, unlike in many other languages, "guilt" and "debt" have the same root word. However, getting into debt should not be demonized if it benefits future generations.
The debt brake weakens investment incentives
"The debt brake is not suitable for combating climate change and for the new locational competition that the US and China have unleashed with enormous fiscal support," says Ludovic Subran, French economist and chief economist at Allianz. It weakens the financial leeway and thus also the incentives for companies to invest in future fields in Germany.
"At the moment, it is not possible to reconcile competitiveness, industrial development, the energy transition and social equality without incurring government debt," says Subran, and also raises the question of whether it is really advisable to let lawyers such as the German constitutional judges decide on such important questions and not politicians and economists.
The Allianz chief economist is not alone in his assessment in France. On the contrary, Germany's budgetary discipline has always been viewed with scepticism by the majority of politicians, economists and commentators, and not infrequently reviled as disastrous "orthodoxy".
"The grenade detonated by the red-clad judges in Karlsruhe into the heart of the German coalition will inevitably have an impact on the European Union," said the conservative newspaper Le Figaro. Not only aid to Ukraine, but also the EU's major priorities such as the "green" transformation or strategic autonomy could suffer as a result.
More than 500 billion euros of "untapped debt potential"
Olivier Passet of the Xerfi research institute sees Germany's supposed special budgetary path finally at an impasse now that Karlsruhe is putting the many special pots created to circumvent the debt brake to the test. "Strategic areas of public policy, such as climate, transport and defence, which require continuous efforts, are at risk of survival," he is also convinced. "These investments cannot be accommodated in the straitjacket of the constitutional brake, while Germany urgently needs to renew and transform its economy."
Passet speaks of an "untapped debt potential" of more than 500 billion euros over the next four to five years. If Germany were to add this sum to its current debt planning, the budget deficit of only 2 to 2.5 percent would still be well below the French level.
However, the French criticism is not free of contradictions. On the one hand, it is hoped that more state investment will strengthen its own economy, which is closely intertwined with Germany's, especially at the industrial level. But when Germany spends a lot of money, as it did recently during the energy crisis or to promote Tesla and Intel plants, the grumbling is also great.