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OPINION AND ANALYSIS

OPINION: Germany will have to endure Covid for a while longer, but at least Merkel is going

Both Angela Merkel and Covid have been around in Germany for seemingly forever. But at least change is on the horizon, even if we don't know what's coming next, writes Brian Melican in Hamburg.

OPINION: Germany will have to endure Covid for a while longer, but at least Merkel is going
Brian Melican is glad to see the back of Merkel. Photo: picture alliance/dpa | Kay Nietfeld

It’s another typically grey Hamburg afternoon and I’m sitting at my desk eyeing up my postal vote for the upcoming Bundestagswahl. In recent years, I’ve often dropped my ballot off at the electoral services offices several weeks before polling day. After all, I was always pretty sure of who I wanted to vote for, if not necessarily always sure of precisely how to do that (anyone who thinks Erststimme/Zweitstimme (first and second vote) is complicated should give the five-vote system for the Hamburg local elections a try…). This time round, though, I’m hesitating.

It would appear that I’m not alone. As pollsters, pundits, and publicans (those much underestimated societal barometers) confirm, the mood in Germany this summer has been characterised by a strange blend of stasis and volatility. The stasis can be summed up in two words: Merkel and Corona. Both have been around seemingly forever – and it feels difficult to imagine either ever going away. The volatility comes from the complete uncertainty about what will come after them (and when “after” will be).

READ ALSO: EXPLAINED: When exactly will Merkel leave office?

Let’s start with Merkel. She had been in office for little over six weeks when I first moved to Hamburg in early 2006. My entire life in Germany to date has taken place under a Merkel chancellorship, as has that of anyone currently turning 16 or younger. Through this feat alone, she has become beloved of many Germans, who of course like nothing more than weighty stability, both in their cars (Mercedes, BMW) and their Chancellors (think Kohl).

In fact, Germans are such suckers for stability that they voted Merkel even after her core campaign message became nothing more ambitious than “Sie kennen mich ja”. This translates as “Well, you know me”, but might be rendered facetiously as “Better the devil you know”.

It’s a paradox we’ve all come to know. Germans dislike almost everything about Merkel’s policies (or lack of them), but have proved unwilling to trust anyone else with the levers of power.

Literally everyone in Germany I know is deeply dissatisfied with something: people who vote for Merkel’s CDU often think they’re too soft on migrants and complain that they haven’t done enough to keep the Autobahn network in shape; people who don’t vote for the CDU are perplexed that it still refuses to recognise that Germany has always run on immigration and think the millions spent on re-tarmacking motorways might be put to better use on crumbling schools and understaffed hospitals.

Chancellor Angela Merkel with conservative chancellor candidate Armin Laschet. Photo: picture alliance/dpa | Michael Kappeler

If you detect some frustration in me personally here, you’re right: on most issues in public life, from immigration to public investment, the debate has barely moved on since I arrived. Ich kann es nicht mehr hören (I can’t listen to it anymore). The fact that Merkel only really scraped back in in 2017, having lost eight percent vote share (no, most people don’t remember that bit, either), suggests that I may not be as alone as I sometimes feel here.

In any case, I for one am absolutely delighted that Merkel has chosen to release us from this 16-year-limbo.

I know the prospect of her retiring worries some people – not just in Germany, but elsewhere – because “compared to Trump, Johnson et al, she stands for a different style of doing politics”, as the argument goes. That’s certainly true, but declaring her to be the best leader a western democracy in the early twenty-first century could ever have by comparing her to populism’s most mendacious sociopaths betrays, in my view, a worrying lack of ambition. Compare her to a leader with plausible hair and a political programme – like Emmanuel Macron, for instance, or Sanna Marin – and she looks like a tired hack with very little to say for herself.

This spring, even the most dyed-in-the-wall Merkel apologists couldn’t overlook just how much damage an utter lack of convictions can wreak. After going in front of the cameras in March 2020 to do what a chancellor has to do (“It is serious; take it seriously”), Merkel retreated behind a webcam for the rest of the pandemic, sniping at the various state leaders when they didn’t agree with her on coronavirus restrictions and going borderline unconstitutional at several points along the way.

READ ALSO: An era ends – how will Germany and the world remember the Merkel years?

Germany stuck in a Merkel – and Covid rut

Which brings us on to the second cause of the odd feeling of stasis: Corona. Just like with Chancellors, Germans don’t like taking risks with illnesses, either. We have always been a nation of hypochondriacs, and in days gone by, this was advantageous: doctors take ailments seriously and routinely run diagnostics people in other countries have to fight tooth and nail (or be privately insured) for. Yet the virus has brought out the worst in us.

As a country, we are terrified of the virus to the point that we still put on masks to walk three feet to the toilet in a restaurant, but are equally scared of the 1-in-100,000 chance of getting ill with the available vaccines. It’s a bad case of: “Wasch mich, aber mach mich nicht naß!” (wash me but don’t get me wet – similar to ‘having your cake and eating it’) Either way, Germany is doomed to suffer a bad autumn and winter in which we bear higher rates of illness than we would like with less freedom than we would want.

People waiting for a jab at Hamburg’s Elbphilharmonie on September 3rd. Is Germany ready for political change? Photo: picture alliance/dpa | Ulrich Perrey

Nothing, however – not Merkel, not Corona – lasts forever, even though Germans love nothing more than a protracted status quo.

But there you go: that’s the Germany I fell in love with enough to become German back in 2015 (yes, before it was cool/necessary for Brits to do so). And because of that, I at least get to register my discontent at the ballot box in just a couple of weeks’ time. Habitually, I vote Green; in locals, I’ve even gone as far as Die Linke (voting SPD in Hamburg is just like voting CDU). Yet something tells me we might need the FDP in government this time round before they start making us check into our own flats with the cursed LUCA app. Then again, I dislike much of their manifesto and personnel … Tough one. 

So I resort to the Wahl-o-mat. As it turns out, I should be voting for DIE PARTEI. Now, that seems to be taking my instinct to break out of endless Grand Coalitions a little too far. Even back in the UK, I never voted Monster Raving Loony. What is more: the less clear the result, the longer Merkel will have to stay on as caretaker until a government is formed. And so my hesitation continues.

Member comments

  1. I don’t known from whence you originate, but compared to the USA (the UN-united States), Merkel is at worst a competent leader.

  2. This is an incredibly imbalanced piece of student journalism.

    I largely agree that it’s time for Merkel to step down. Like all of us, she has her strengths and her weaknesses, and I agree that her era will not be noted for its economic vision. All of this said, I feel she deserves a lot more respect for what she has achieved. And this comes from someone who would never vote CDU (if i could vote in germany).

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ECONOMY

Schuldenbremse: What is Germany’s debt brake and how does it affect residents?

Nothing sums up Germany's cautious relationship with money quite as well as the debt brake - but this little clause in the constitution has recently caused no end of chaos. Here's what you need to know about the so-called 'Schuldenbremse'.

Schuldenbremse: What is Germany's debt brake and how does it affect residents?

What is the debt brake and why did Germany introduce it?

Known as the Schuldenbremse in German, the debt brake is a cap on government borrowing that’s enshrined in Germany’s constitution. It states that the federal government can only take on a certain amount of new debt in each fiscal year.

This is capped at 0.35 percent of Gross Domestic Product (GDP) – the amount of money the country produces each year in goods and services. Though GDP varies from year to year, this generally gives the government enough wiggle room to borrow around €9 billion annually.

When it comes to spending on a regional level – i.e. by state governments in Germany – the rules are even stricter. States aren’t allowed to borrow any money to fund their plans and must therefore create balanced budgets that finance spending exclusively through tax income and money from the central government.

But why exactly has Germany decided to tie itself to such strict rules on spending? Well, there are quite a few answers to that. 

Back in 2009, the Grand Coalition of the Christian Democratic Union (CDU) and Social Democrats (SPD), led by Angela Merkel, decided to bring the debt brake into law. At the time, the global economy was struggling to deal with the fallout of the 2008 financial crisis, and Germany was racking up a huge deficit. 

The idea was to bring borrowing back under control as soon as possible and prevent leaving billions of euros in debt for future generations to pay off. It also paid homage to the main edicts of neo-liberalism, creating a streamlined state with little room for generous investments or high social welfare payments. 

Thanks to the ongoing effects of the financial crisis, the debt break only came into force seven years after it was put in the constitution. This means that since 2016, the federal governments have been tied to 0.35 percent cap on borrowing.

That said, there are a few exceptions to the Schuldenbremse: in periods of national emergency, such as natural disasters or pandemics, the government is allowed to put the debt brake to one side. That’s exactly what happened during the Covid pandemic in the years 2020 to 2022, and now it appears it will be put aside for the fourth year in a row. In other words, it has been sidelined for exactly half of the time it has been in place.

READ ALSO: Germany to seek debt rule suspension for 2023

Why has the debt brake been in the news recently?

The debt brake was put in the spotlight in early November when Germany’s Constitutional Court declared tens of billions of earmarked government spending to be ‘unconstitutional’.

The case related to €60 billion of borrowing that was originally intended for tackling the Covid crisis but had later been diverted towards a fund for fighting climate change known as the Climate and Transformation Fund.

In normal cases, moving unspent money around wouldn’t be a problem – but in this case, the specific rules around the debt brake came into play. Utilising the exceptions in the debt brake, the €60 billion was borrowed for the purpose of stabilising the economy during the pandemic – and as such it was only supposed to go towards tackling that emergency.

Wind turbines in Germany

Wind turbines in the northern German state of Schleswig-Holstein. Photo: picture alliance/dpa | Christian Charisius

Beyond this amount, which already represents a huge chunk of the national budget, the court decision also invalidated the Economic Stabilisation Fund (WSF). This fund was also originally set up during the Covid crisis and later repurposed as Olaf Scholz’s ‘Doppelwumms’: a €200 billion pot that paid for the energy price breaks and other relief measures in the wake of the Ukraine war. 

READ ALSO:

Finance Minister Christian Lindner (FDP) announced that the debt brake would be set aside for one more year to allow the government to meet its financial commitments for 2023. However, the budget for next year – and how the significant gaps in funding will be filled – still remain unclear.

The crisis has sparked a major debate among politicians about whether the debt brake is still fit for purpose. 

What do critics of the debt brake say? 

As you might expect, the tight controls on spending aren’t popular with everyone – especially those on the left on the political spectrum. 

Proponents of the debt brake say we should lower the deficit to avoid lumbering future generations with unmanageable debts, but critics of the mechanism make the opposite argument. They say that straightjacketing spending will actually put a strain on future generations as the government will be unable to invest in modern infrastructure and could therefore be hindering growth.

If borrowing is slashed too much and tax revenues don’t increase, projects like the green transformation, upgrading public transport and pushing ahead with digitalisation will inevitably be put on the backburner. The government will be forced to prioritise its urgent day to day spending in the present rather than trying to invest in the future – and it could also be forced to cut vital public services.

Deutsche Bahn train

Deutsche Bahn staff give the sign for an ICE high speed train to leave the main railway station in Stuttgart, southern Germany, on August 11, 2021. Photo by THOMAS KIENZLE / AFP

Other critics argue that the debt brake was appropriate at the time when it was introduced but that times have changed and governments require more flexibility. 

In the early to mid-2000s, Germany was riding high on a booming manufacturing and exports sector fuelled by cheap Russian gas, and had made little attempt to invest in renewable energy. Now, however, with Germany transitioning away from cheap Russian gas while trying to slash the country’s carbon emissions, Germany is faced with numerous expensive challenges at a time when the economy is especially weak – meaning borrowing more or raising more taxes feel like an inevitability. 

READ ALSO: ‘2024 a turning point’: When will Germany’s rail network run on time?

Could the debt brake be reformed in the future?

That’s certainly an idea that’s come from multiple camps – not least Economics Minister Robert Habeck of the Green Party. Speaking at the recent Green Party Conference, Habeck slammed the current rules on borrowing, stating: “With the debt brake as it is, we have voluntarily tied our hands behind our backs and are going into a boxing match.”

According to Habeck, the debt brake should be reformed according to the “green golden rule” to allow borrowing for investments rather than everyday spending. This is an idea that has also been put forward by economists.

Saskia Esken, the co-leader of the SPD, has also spoken out in favour of a reform of the debt brake to avoid putting a drag on growth in the future. 

However, the likelihood of this happening seems low at the moment, even if Greens and SPD politicians – and some members of the CDU – are in favour of it. 

That’s because it takes a two-thirds majority in the Bundestag to change any aspect of the Grundgesetz, or constitution – a much higher bar than the simple majority needed to change a law.

The FDP, who are in the coalition alongside the Greens and SPD, are also fiercely opposed to any reform of the debt brake and want to rein in government spending instead. 

Christian Lindner

German Finance Minister Christian Lindner (FDP) speaks in the Bundestag. Photo: picture alliance/dpa | Michael Kappeler

Messing with this fiscal rule could also prove unpopular: a recent poll found that 61 percent on Germans were opposed to any reform of the debt brake, as opposed to 35 percent who were in favour of it, and 4 percent who didn’t know. 

It means that in the medium term at least, the government may have to take a scalpel to its previous spending plans, cutting spending on investment projects, public services like healthcare and transport and social welfare such as child and unemployment benefits. Or it may find a way to raise some taxes without upsetting the FDP. 

READ ALSO: How Germany’s budget crisis could affect you

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