German minister keen to follow debt rules despite cost of living aid

German Finance Minister Christian Lindner has said he wants to avoid generating additional debt, though measures are planned for the start of next year to support the public as the cost of living soars, reported dpa.

"We will have to manage and economise within the framework set by the constitution," Lindner, of the pro-business FDP, told dpa.

His comments come amid speculation that Berlin might decide to make another exception to strict guidelines concerning the budget, known as the debt brake.

The constitutional rule limits Germany's public deficit to 0.35% of economic output unless there are exceptional economic circumstances.

Anchored in Germany's Basic Law since 2011, it aims to ensure that federal and state budgets manage without income from loans.

The traditionally frugal nation - also Europe's largest economy - broke its own debt rules at the beginning of the coronavirus pandemic to unleash billions of euros in financial aid to steer the economy through the crisis.

The Bundestag may allow for the debt brake to be suspended in "exceptional emergency situations."

Lindner said some people were speculating that a further exception would be made to the debt brake, based on what he called a misunderstanding that general political projects and wishes could then be financed. "That is legally impossible," he said.

Labour Minister Hubertus Heil had made plans to return to the debt brake from 2023 subject to the country's economic situation.

On Friday, Chancellor Olaf Scholz suggested there might be a possibility of further relief under a housing subsidy reform, given energy prices are rising rapidly.

Lindner said Bundestag lawmakers would address the model in discussions of the regular budget and said there were no plans for a supplementary budget for this purpose.

"Our goal remains to combine compliance with the debt brake with relief and record investments," he said. "But otherwise, this requires the courage to make clear decisions on political priorities."

Spending has been hotly debated among lawmakers in Germany's three-party coalition, led by Scholz, a Social Democrat, as concerns grow about the cost of living and energy prices amid the war and ongoing pandemic.