When François Bayrou announces a white year, Friedrich Merz takes out the “bazooka”. On March 19, the leader of the CDU (Center-Droit), barely out of the winner of the legislative elections in late February (before the far right of the AFD and the SPD social democrats) and before becoming chancellor, had a reform adopted by the German Parliament to loosen the constitutional brake on debt, so characteristic of the German budgetary orthodoxy and which is added to an investment plan Massive of 850 billion euros by 2029. A plan which he described as financial “bazooka”.
Berlin lifts the brake on debt for military spending
“It is a change of doctrine,” explains Ronan Le Gleut, Senator LR of the French established outside France, a connoisseur of the neighbor from across the Rhine. “This brake on the debt prevented the German federal state from presenting a budget with a deficit greater than 0.35 % of the national wealth produced. With this reform, military expenditure will be able to derogate from this deficit limit. Germany can afford to massively increase its expenses, because its debt amounts to 62 % of its GDP, unlike France whose debt reaches 113 % of its wealth produced. The two countries are in very different financial situations. »»
IFG Germany and France
On the side of the German left, this acceleration of debt is seen as a jacket reversal on the part of Friedrich Merz. “Throughout the legislative election campaign, the CDU assured that it would not touch the brake of debt,” recalls Daniel Freund, German ecological MEP. “The outgoing left coalition (the SPD, the Greens and the Liberals of the FDP), led by Olaf Scholz, even fell for these public spending issues. The German right had prevented him from reassiving at the ecological transition 60 billion euros planned for the COVVID crisis, by bringing the conflict before the German Constitutional Court. But just after his victory in the elections, the Curator Friedrich Merz loose the debt brake, without even waiting for the new Bundestag to be formed and that he was elected chancellor … “
A bazooka of public expenditure adopted at the right time by Friedrich Merz, since its government coalition concluded between the CDU and the SPD has a more limited majority in the new Bundestag than in the old one. Consequently, Friedrich Merz had to wait for the second round before being chancellor by the Bundestag, a first in the history of the Federal Republic of Germany.
A massive investment plan
While the French government of François Bayrou seeks to save 40 billion euros per year, that of Friedrich Merz can boast of injecting each year in the economy 120 billion euros by 2029. Investments which will relate to rail infrastructure, housing, hospitals, energy and defense, within the framework of the reset of Europe. “These investments in the infrastructure were more than necessary,” said Daniel Freund, “when we see the train delays that accumulate with the national company of Deutsche Bahn, or the Dresden bridge which collapsed last year. But beware, we observe that certain budget lines are moving and will not finance investments but tax cuts and gifts to the conservative electorate, “observes the elected opposition.
“These investments will allow Germany to get out of the recession that it has known for three years, because of the price of energy which has hit its important industrial fabric hard and in particular the automobile and chemistry,” says Ronan Le Gleut. “It was not good for anyone in Europe that Germany was in recession, because Berlin is the economic engine of Europe. German companies are the first customers of French companies. »»
Germany much less flexible with the European Union budget
If these massive expenses in Germany will benefit the European economy, Berlin does not defend the same type of recovery on the EU scale. The federal government has even categorically opposed the multi-year budget of the European Union (2028-2034) presented by the European Commission in mid-July. This European budget increased to 2000 billion euros with additional means for the defense and competitiveness of companies. A financial framework qualified as “ambitious project” by Paris but deemed “unacceptable” by the German government spokesperson, “at a time when all member states are making considerable efforts to consolidate their national budgets. The tone is set then that 2 years of negotiations open on this budget between the 27 EU countries and the European Parliament. “This is only the start of the discussions,” says Ronan Le Gleut. “The power coalition in Germany is pro-European, it does not defend a drop in the EU budget, as does the extreme right, but an increase in reasonable proportions. »»
“It is very strange that Friedrich Merz does not support the European budget carried by Ursula von der Leyen, which is of the same party as him, and that this financial framework is defended by the right in the European Parliament”, analyzes Daniel Freund. “This reaction from the German government made me angry. It is as if the government which offers the greatest deficit in the history of the Federal Republic of Germany said “We have no money for Europe. »»