The German state will seek approval to borrow up to €356 billion in order to protect the economy in the face of the coronavirus pandemic, giving up on a long-standing commitment to maintain a balanced budget.
A bill will be presented in the German parliament in the coming week to give the government borrowing powers and to establish a business rescue fund of around €600 billion, according to the Financial Times.
Balanced budgets and strict limits on public debt have been part of Germany’s political orthodoxy since the financial crisis of 2008, but a growing chorus of economists and financial regulators have been calling on the country to unleash its fiscal power to fight the coronavirus crisis.
The government has already approved unlimited loans to companies through state-controlled development banks and has indicated it would do more to protect workers and small business. “Since World War II there has been no greater challenge to our country,” Angela Merkel said this week in a rare public address to the nation.
The European Central Bank set out a €750 billion bond-buying program this week in order to keep eurozone borrowing costs under control as countries fight the disease.
The German ministry of finance did not return a request for comment.
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