Germany's prospective governing parties have now amended the country's constitutional "debt brake" in order to boost defense spending. But by limiting the amendment to military expenditure, they are squandering an opportunity to invest in the country's economic future.
BERLIN – For the first time in several decades, Germany is rearming. In the ongoing talks to form a coalition government, the Christian Democrats (CDU) and the Social Democrats (SPD) – the first- and third-largest parties in the Bundestag after February’s federal election – have agreed to exclude military spending above 1% of GDP from the constitutionally enshrined “debt brake” limiting fiscal deficits. The change, passed by the Bundestag with the votes of the Green party, marks a watershed moment in German fiscal policy and will create path dependencies for years to come.
BERLIN – For the first time in several decades, Germany is rearming. In the ongoing talks to form a coalition government, the Christian Democrats (CDU) and the Social Democrats (SPD) – the first- and third-largest parties in the Bundestag after February’s federal election – have agreed to exclude military spending above 1% of GDP from the constitutionally enshrined “debt brake” limiting fiscal deficits. The change, passed by the Bundestag with the votes of the Green party, marks a watershed moment in German fiscal policy and will create path dependencies for years to come.