Klingbeil’s comments are likely to irritate his coalition partners in German Chancellor Friedrich Merz’s Christian Democrats, who have rejected calls from the left for additional borrowing. The conservatives are under pressure from the far-right Alternative for Germany (AfD) party — now leading in many national polls — which has frequently attacked the chancellor for taking on hundreds of billions of euros of debt in an effort to stimulate growth.
Berlin is now putting the defibrillators on an economy facing a fourth straight year of stagnation. It will borrow nearly €200 billion next year under the outline of a budget draft agreed on Tuesday by ministers, and another €600 billion over the next three years.
Of that, some €85 billion will be borrowed by new “special funds” earmarked for spending on infrastructure and defense, as Berlin tries to make up for decades of underinvestment in both areas.
At the start of the year, the government had to reckon with over 1 percent growth, but Klingbeil lamented that it had had to halve its forecast due to “Trump’s irresponsible war on Iran and the worldwide energy price shock that it has caused.”
“This is not our war, but we are massively feeling its effects,” he said.
Klingbeil also said that the tariffs raised by the U.S. President last year are having a profound effect on Germany’s export-driven economy. His new budget aimed to make the economy “more resilient” and looked forward to a time “when we don’t have to let ourselves be blackmailed by the USA,” he added.
The budget outline also incorporates a broad range of measures to cut spending and raise money in other ways to plug various financing gaps, notably in the country’s health system, which is set to receive the proceeds of a new tax on sugary drinks.
Johanna Treeck contributed reporting.