Germany: CDU/CSU and SPD announce plans for mega-loans
In their exploratory talks, the CDU/CSU alliance and the SPD have agreed to take out hundreds of billions in new loans. A debt brake enshrined in the constitution is to be eased to boost defence spending and the creation of a special fund of 500 billion euros for investments in infrastructure is also planned. In order to achieve the two-thirds parliamentary majority required for amending the constitution, the motions are to be put to vote next week, before the the current parliament expires.
Berlin is back
There was no alternative to the decision to exempt defence spending from the debt brake controls, comments the Frankfurter Allgemeine Zeitung:
“Germany is coming back from the enforced break that the traffic-light coalition went on in the autumn, despite the fact that Putin was on the advance and Trump was expected to return and open a second political front. The fact that the CDU/CSU and SPD have been able to reach an agreement - albeit at the high price of special funds for infrastructure - is an important and powerful signal to Putin, Trump (who can no longer claim that Berlin is doing nothing) and the European allies. 'America is back', said Trump in his State of the Union address. Well Germany is back too.”
Danger of vital structural reforms being neglected
Der Tagesspiegel sees the chosen path of the CDU/CSU and SPD as very risky:
“Given the planned financial leeway, it could be very tempting to put off urgently needed reforms yet again - and leave the real problems for future generations. Because no matter how big it is, a bandage is of little use when you have a broken leg. Germany isn't suffering from an economic crisis that can be solved with a simple cash injection, but from a structural one. ... So to remain credible the new government must also tackle the country's structural problems. Otherwise even these 500 billion euros could quickly go up in smoke.”
This is what leadership looks like
Hospodářské noviny voices understanding for the plan to put the packages to vote before the expiry of the current German parliament in order to secure the necessary majority:
“The Bundestag is to vote next week. ... However, it is the outgoing Bundestag that is to vote, not the one that emerged from the February elections and has yet to take office. This is legal, albeit politically problematic. Merz has said openly that he is aware of the sensitivity of this step and is prepared to accept the potential political consequences. That's what you call leadership.”
Not yet chancellor and already breaking promises
All of a sudden the massive debts incurred by such huge packages is no longer an issue, Der Standard observes:
“Many are astonished by this news considering CDU leader Friedrich Merz's words during the election campaign: 'We must not saddle our children with more and more debt.' Now he hasn't even started coalition negotiations - let alone been appointed chancellor - and he's already breaking one of his election promises. In normal times that would have been the end for him. ... Merz will get over the fact that the party's youth organisation Junge Union is already up in arms against the new debt-financed voluntarism by pointing out that it's better to borrow for the future than to have no future at all.”
Merz has read the signs of the times
The Guardian is impressed by the CDU leader's about-face on fiscal policy:
“In a famously cautious political culture, Mr Merz's bid to bypass legal restrictions on government debt represents a seismic shift. ... Mr Merz, a former investment banker, has been a deficit hawk and economic liberal throughout his career. It is an irony of fate that it should fall to him to challenge the debt-aversion that has hobbled Germany's ability to react to new geopolitical realities. But the Christian Democratic Union (CDU) leader should be congratulated for having the political courage to read the signs of the times.”
Return to a leading role in Europe
El Mundo praises the unity of the two major parties on this issue:
“With this initiative the future chancellor Friedrich Merz has demonstrated his leadership qualities, although the SPD's sense of state responsibility has also been crucial. Germany is thus demonstrating its desire to return to a leading role in Europe and thus respond to the precarious international context opened up by the change of course of the White House, which is determined to abandon Ukraine and transform the map of alliances forged after the Second World War.”