Germany's "Black Zero" Rule May Be Gone Forever
The new coronavirus has forced Berlin to finally relax its infamous debt brake. Such temporary measures have a curious tendency to become permanent.
Thanks Olaf.
Photo: BloombergGermany’s Finance Minister Olaf Scholz has finally admitted economic reality and announced a temporary suspension of the country’s infamous debt brake — known as the Schwarze Null (Black Zero) rule, which insists on a budget balanced between fiscal spending and tax receipts.
This stricture has dominated not just German but all of Europe’s budgetary discussions for a decade. The Germans would never say so, but Wednesday’s move may well become one of those emergency temporary measures that ends up permanent. With the course of the new coronavirus impossible to determine, and with recession already looming over the European Union’s biggest economy, it might be a long time before Berlin can contemplate a reduction in spending again.