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RE: LeoThread 2024-12-05 08:38

in LeoFinancelast month

Part 3/8:

While it might seem rigid, the debt brake incorporates flexibility in two major aspects. Firstly, during economic downturns, the government can temporarily exceed this borrowing limit to stimulate the economy. Secondly, in the case of extraordinary emergencies, an escape clause is invoked, allowing for higher debts. This provision notably came into play due to crises like the COVID-19 pandemic and the Russian gas crisis, which warranted substantial government spending beyond the normative limits.

Despite these allowances, the ruling has constrained investment in critical infrastructure and the energy transition, raising questions about the long-term viability and sustainability of such a rigid fiscal stance.

The Current Debate: To Reform or Not to Reform?