GERMANY: Black zero, not debt brake is the true signpost

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A renewed debate has emerged about the infamous debt brake after, in a newspaper op-ed, the chief of Angela Merkel’s chancellery argued for changing the constitution to effectively abandon the rule. This, however, remains highly unlikely. Instead, the more interesting question is whether the next government might drop the “black zero” policy of balanced budgets, at least using its 0.35% of GDP deficit leeway under the existing debt brake once the pandemic emergency is over. Behind the move is the old Merkel strategy of “asymmetric demobilization”: her Christian alliance (CDU/CSU) ta
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