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POLITICS

Germany plans return to debt-limit rules in 2023

Germany will reinstate its so-called debt brake in 2023 after suspending it for three years to cope with the impact of the coronavirus pandemic, sources in the finance ministry said Wednesday.

German Finance Minister Christian Lindner (FDP) at an event in Berlin on June 15th.
German Finance Minister Christian Lindner (FDP) at an event in Berlin on June 15th. Photo: picture alliance/dpa | Michael Kappeler

The government will borrow 17.2 billion euros ($18.1 million) next year, adhering to the rule enshrined in the constitution that normally limits

Germany’s public deficit to 0.35 percent of overall annual economic output, despite new spending as a result of Russia’s war in Ukraine, the sources said.

The new borrowing set out in a draft budget to be presented to the cabinet on Friday is almost 10 billion euros higher than a previous figure for 2023 announced in April.

However, “despite a considerable increase in costs, the debt brake will be respected,” one of the sources said.

Although Germany is traditionally a frugal nation, the government broke its own debt rules at the start of the coronavirus pandemic and unleashed vast financial aid to steer the economy through the crisis.

READ ALSO: Debt-averse Germany to take on new borrowings to soften pandemic blow

The government has this year unveiled a multi-billion-euro support package to help companies in Europe’s biggest economy weather the fallout from the Ukraine war and sanctions against Russia.

Berlin has also spent billions to diversify its energy supply to reduce its dependence on Russia, as well as investing heavily in plans to tackle climate change and push digital technology.

But despite the additional spending, Finance Minister Christian Lindner has maintained the aim to reinstate the debt brake in 2023.

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UKRAINE

Germany’s Schröder to remain in Social Democrats despite Putin ties

Former German chancellor Gerhard Schroeder will remain a member of the ruling Social Democrats (SPD), the party said Monday, finding his ties with Vladimir Putin did not breach its rules.

Germany's Schröder to remain in Social Democrats despite Putin ties

The SPD’s Hanover branch said Schröder, whose party membership falls under its umbrella, was “not guilty of a violation of the party rules, as no violation can be proven against him”.

The branch had opened a hearing in July to discuss 17 motions from local and regional chapters against Schroeder’s ongoing membership of the party.

The decision can be appealed, but legal experts say there are high hurdles for expelling members.

Schröder, chancellor from 1998 to 2005, has refused to turn his back on Putin despite Russia’s invasion of Ukraine.

His stance has made him an embarrassment to the SPD, which is also the party of Chancellor Olaf Scholz.

READ ALSO: Germany’s Social Democrats move to dispel Schröder over Putin ties

He has also been widely criticised for holding a number of lucrative posts at Russian energy giants, and it was only after much public pressure that Schröder in May gave up his seat on the board of Russian energy group Rosneft.

He later also announced he would not be joining Gazprom’s supervisory board as initially planned.

Germany’s parliament in May removed some of the perks Schröder was entitled to as an elder statesman, stripping him of an office and staff.

Schröder, 78, who was Angela Merkel’s immediate predecessor, has remained defiant and met with Putin in Moscow in July.

In an interview after the visit, he claimed Russia wanted a “negotiated solution” to the war – comments branded as “disgusting” by Ukrainian
President Volodymyr Zelensky.

Schröder has also called on Berlin to reconsider its position on the Nord Stream 2 gas pipeline, which stands completed but was blocked by the German government in the run-up to the invasion of Ukraine.

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