Germany’s election victor must ditch its debt rules—fast

FRIEDRICH MERZ, who is likely to become Germany’s next chancellor, used his victory in Sunday’s elections to issue a remarkable warning to his compatriots. This was not the need to revive his country’s ailing economy, nor to respond to the alarmingly strong performance of the hard-right Alternative for Germany (AfD). It was a blistering indictment of Germany’s chief ally, the United States of America, and its president, Donald Trump.

“It is clear that the Americans, at least this part of the Americans, this administration”, Mr Merz said, “are largely indifferent to the fate of Europe.” He went on to declare it his “absolute priority” to help Europe achieve “independence from the USA”. These are astonishing words from an incoming German chancellor, the leader of the Christian Democrats (CDU) and a lifelong Atlanticist. Unfortunately, Mr Merz is right: Europe does indeed have to contemplate being able to defend itself without America fighting by its side. His problem is that saying it is easier than doing something about it.

Germany—like the rest of Europe—needs to spend money on defence, and a huge amount. However, owing to a constitutional amendment brought in by a previous coalition government, public spending in Germany is held back by a “debt brake” that prohibits the government from running a structural deficit of more than a minuscule 0.35% of GDP outside of emergencies. And therein lies the problem. After Sunday’s vote, any feasible new coalition will lack the seats to alter or eliminate that amendment.

The two parties that have ruled Germany either in turns or in tandem since the second world war had a bad election. True, the CDU, together with their Bavarian allies (the CSU), came top, meaning that Mr Merz will become chancellor unless coalition talks fail (which is not impossible). However, they scored their second-worst result ever and the Social Democrats, who led the outgoing government, had their worst showing since their foundation in the 19th century. By contrast the radicals did very well; AfD came second with a shocking 20.8% of the vote and the former communist Die Linke (“The Left”) got nearly 9%.

Relaxing or scrapping the debt brake needs a two-thirds majority in parliament. The mainstream parties had that before the election—and plenty of people, including this newspaper, urged them to act while they still could. Unfortunately, when the new Bundestag convenes, that two-thirds majority will be gone. The centre-right and centre-left are now the only possible two-party coalition with the numbers for a majority in the new Bundestag because, like all other mainstream parties, they have ruled out coalition with the AfD.

In any case, the AfD will never vote to relax the debt brake. The former communist Die Linke wants to scrap it in principle, but says it will “never vote for rearmament”. In the absence of deep spending cuts or savage tax rises, Germany will therefore not be able to muster the extra defence spending it needs to meet the threat of an aggressive Russia and a withdrawing America.

A constitutional quirk offers a way out, but only if Germany acts fast. The new parliament will not convene until March 25th, and in the meantime the old lame-duck one can still act. Mr Merz’s ranks, the SPD and the Greens, which together still hold a two-thirds constitutional majority in parliament, should push forward an urgent reform to the debt brake while they still can. Ideally, they would scrap it altogether, as Germany’s allergy to debt has starved not just its defence but its roads, rail, digital infrastructure, hospitals and much else. If that is too much to swallow, then at the very least an exemption must be made for defence spending, including aid to Ukraine.

Using the lame-duck parliament in this way is unorthodox. Many fainthearts say it is impossible politically—and it would indeed be branded as illegitimate by the radicals who did so well in Sunday’s vote. Some fear that the German constitutional court might even throw it out. However, we think that extraordinary times call for extraordinary measures.

The Greens have now proposed such a reform, to help Ukraine. To his credit, Mr Merz has said he is considering the idea, though it will only work if the SPD agrees too; exploratory talks are said to be under way. Should dithering prevail, as it did before the election, then Mr Merz will need to find a different path by striking a bargain that will get Die Linke on board, hard though that will be: the Left will demand a lot more social spending if it is to agree to rearmament, which will spook many in Mr Merz’s party and the even-flintier CSU.

But the alternative would be worse. Seeking to mobilise public opinion by being critical of Mr Trump, Mr Merz risks driving America out of NATO even faster—or at least advertising the alliance’s faultlines to Russia. If he does not find a way to raise funds and devise a multi-year strategy for Europe to take up its own defence, he will leave Germany even more vulnerable. Most new leaders are not tested before they enter office. But Donald Trump and Vladimir Putin wait for no one. ■