(de-news.net) – Matthias Miersch, the leader of the SPD parliamentary faction in the Bundestag, has come under sustained criticism from prominent German economists as well as opposition politicians for his consideration of additional state borrowing in response to rising energy prices and a potential escalation of the Iran conflict. Miersch argues that, in order to prevent broader systemic economic disruption, exceptionally severe macroeconomic risks could justify the temporary suspension of Germany’s constitutionally anchored debt brake. Critics, including representatives of the Union parties and several economic advisers, reject the premise that such a fiscal emergency currently exists and caution that any expansion of public borrowing risks undermining financial stability, placing upward pressure on interest rates, and gradually weakening established fiscal rules.
Prominent German economists have taken issue with Miersch’s contemplation of additional borrowing in the event of a worsening Iranian situation and corresponding spikes in energy prices. In related comments, Jens Südekum, an economist and advisor to SPD leader and Finance Minister Lars Klingbeil (SPD), stated that he does not presently see any justification for such a fiscal response under current conditions. In a similar assessment, Lars Feld, who advises former Finance Minister Christian Lindner, argued that neither an economically nor legally defensible emergency situation is present and characterized what he described as the Social Democrats’ apparent preference for debt-financed spending as “strange,” thereby underscoring his critical stance toward the proposed approach.
Miersch had previously maintained that the state must retain full access to its fiscal instruments in the event of an emergency, given its responsibility to prevent a systemic collapse of the economy. Following this line of reasoning, he suggested that such circumstances could require the temporary suspension of Germany’s constitutional debt brake alongside the declaration of a budgetary emergency to permit additional borrowing. Although a ceasefire is currently in place, he linked this hypothetical contingency to possible disruptions in global energy markets stemming from restrictions on oil exports through the Strait of Hormuz, in the context of the ongoing conflict involving the United States, Israel, and Iran.
These concerns have been echoed in additional economic assessments. Wolfgang Kolev, head of the Ludwig Erhard Forum, warned against establishing a problematic precedent through repeated references to exceptional economic circumstances. In his analysis, the continued invocation of emergency conditions could gradually erode the binding character of the debt brake, ultimately rendering it ineffective as a fiscal rule within Germany’s budgetary framework.
CDU/CSU rejects debt expansion as political complacency
The political reaction from the opposition CDU/CSU has been similarly critical and largely dismissive of the proposal. CDU General Secretary Carsten Linnemann called for structural reforms, stronger work incentives, a substantial reduction of bureaucratic burdens, and consistent fiscal consolidation. He characterized discussions about a renewed suspension of the debt brake as indicative of political complacency and stressed that policymakers should demonstrate the same willingness to contribute and accept responsibility that is expected of society, particularly by prioritizing savings and economic modernization.
Alexander Hoffmann, head of the CSU parliamentary group, likewise rejected the proposal, arguing that increased public indebtedness would not resolve underlying structural economic problems but instead exacerbate them. He emphasized that, in his view, there are no indications of a budgetary emergency that would justify extraordinary fiscal measures, thereby reinforcing the Union’s restrictive stance on additional borrowing.
Deputy parliamentary group chair Mathias Middelberg of the CDU/CSU also warned against any normalization of expectations for higher state borrowing in response to economic shocks. He argued that already approved large-scale debt-financed packages for defense and infrastructure have contributed to rising interest rates in Germany. According to his assessment, further borrowing would likely intensify this trend, with higher financing costs ultimately feeding through into consumer prices and thereby placing additional pressure on both households and businesses.
Miersch, however, had maintained that the state must remain capable of decisive intervention in order to avert severe macroeconomic instability. In his view, all policy options would need to remain available in an extreme scenario. This, he argued, could include the formal declaration of a budget emergency that would temporarily suspend the constitutional limits on borrowing. Under Germany’s constitutional framework, such “exceptional emergency situations” permit the Federal Government to raise additional credit beyond normal restrictions.
Miersch has also highlighted the potential consequences of a blockade of the Strait of Hormuz, arguing that disruptions to oil flows would extend well beyond the immediate energy sector. In his analysis, such developments could place significant strain on global supply chains, with correspondingly broad and far-reaching economic repercussions. In this context, he suggested that maintaining social cohesion might require not only potential financial support measures but also additional state intervention. He further called for a forward-looking policy approach in response to criticism that earlier disputes over fiscal rules contributed to the collapse of the previous “traffic light” coalition of SPD, Greens, and FDP. According to his argument, those who categorically exclude flexible responses to extreme conditions risk underestimating the scale of potential economic disruption should the Iran crisis continue or intensify.
Audio: TTSFree
