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Chancellor Angela Merkel's ruling coalition faces growing calls
at home and from abroad to abandon its self-imposed "black zero"
budget policy of no new borrowing and instead take on new debt
within the limits of the more formal debt brake as a way to help
a slowing economy teetering on the brink of recession.
BDI President Dieter Kempf said that the government should use
the fiscal leeway of the constitutionally enshrined debt rules
and ditch the balanced-budget policy.
"Under the rules of the debt brake, the government could raise
between 10 and 12 billion euros a year, which Berlin could use
for public investment," Kempf told members of the foreign press
association in Berlin.
The business leader pointed out that the economic circumstances
had changed as the economy was faltering.
At the same time, the country was facing massive pent-up
investment needs and investors were willing to even pay Berlin a
premium for issuing debt as German bond yields across the board
turned negative, Kempf said.
Merkel's ruling coalition last week agreed a package of
budget-neutral measures to protect the climate and restore its
green credentials, but drew criticism from environmental groups
that had hoped it would go further.
Merkel and her Social Democrat Finance Minister Olaf Scholz so
far have shown little appetite to abandon their joint pledge to
refrain from taking on new debt, though Scholz himself has
changed his tone over the past weeks.
(Reporting by Michael Nienaber; Editing by Alex Richardson)
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