Kretschmann advocates for a less strict approach to the fiscal rule

In a significant move, Minister President Winfried Kretschmann of Baden-Württemberg has defended the relaxation of the debt brake in the Basic Law. This relaxation is aimed at creating a financial package for defense and infrastructure investments.

Kretschmann, a Green politician, has emphasised that the relaxation is about the self-assertion of Europe politically, economically, and technologically. He also highlighted the need to assert values and principles of peace, freedom, and democracy, citing the dramatically changing security situation in the world as the reason for the relaxation.

The planned amendment to the Basic Law is in line with Kretschmann's views, according to his statements. The amendment will allow for investments in climate protection and the climate-friendly restructuring of the economy, with 100 billion euros allocated to the states for infrastructure, and an additional 100 billion euros dedicated to these causes.

To pass, a two-thirds majority is required in the chamber of states, the Bundesrat, for the amendment to the Basic Law. As of now, no specific federal states have publicly confirmed their commitment to securing this required two-thirds majority in the Bundestag for amending Article 109a of the Basic Law. Achieving such a constitutional amendment typically requires broad consensus, including Bundestag and Bundesrat majorities, but no states have officially pledged support yet.

The debt brake, which limits the federal government's new debt, is planned to be relaxed for expenses in defense, civil defense, intelligence services, cybersecurity, and infrastructure. The dilapidated infrastructure in Germany will be paid for from the special fund created for infrastructure investments. This fund, which does not apply to the debt brake, can hold credits of up to 500 billion euros.

The relaxation would allow for more than about 44 billion euros this year. Kretschmann thanked the Green parliamentary group in the Bundestag for making the financial package for infrastructure investments better. Credits may be taken up for expenses exceeding one percent of the gross domestic product in these categories.

However, Kretschmann acknowledged that ordinary means cannot be used to respond to the current extraordinary challenge. The creation of this special fund is a testament to this understanding, providing a means to tackle the pressing issues facing Germany and Europe.

As the debate surrounding the amendment to the Basic Law continues, it remains to be seen whether the required two-thirds majority will be achieved in the Bundesrat. The implications of this amendment, if passed, could significantly shape the future of Germany's economic and political landscape.