German balanced budget amendment

Germany's balanced budget amendment, also referred to as the debt brake (German: Schuldenbremse), is a fiscal rule enacted in 2009 by the First Merkel cabinet. The law, which is in Article 109, paragraph 3 and Article 115 of the Basic Law, Germany's constitution, is designed to restrict structural budget deficits at the federal level and limit the issuance of government debt. The rule restricts annual structural deficits to 0.35% of GDP.

The debt brake is controversial among economists. It is supported by a German strand of economics, ordoliberalism, while other economists have challenged the rule. In 2024, amid a stagnating German economy, Bundesbank president Joachim Nagel called on the German government to reform the debt brake in order to finance structural investments in the German economy. The debt brake has been amended twice since enactment, in 2022 and in 2025, both under the Scholz cabinet in the 21st Bundestag and both for the purpose of significantly increasing defense spending.

This article is issued from Wikipedia. The text is licensed under Creative Commons - Attribution - Sharealike. Additional terms may apply for the media files.