Germany: in the face of the health crisis, budgetary austerity is once again shattered

Olaf Scholz, German Minister of Finance, September 23, 2020. REUTERS / Fabrizio Bensch

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The health crisis forces Berlin to abandon its budgetary rigor again in 2021. In the draft budget, Germany plans to borrow for the second time on the markets to support the German economy. 

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With our correspondent in Berlin

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Germany will borrow for next year just over 96 billion euros, having already had to borrow in 2020 for a record amount of nearly 218 billion.  

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 ," said Finance Minister Olaf Scholz on September 23, after the adoption of the 2021 draft budget in the Council of Ministers.

The law theoretically prohibits the government from borrowing each year for more than 0.35% of the country's GDP.

But in these exceptional circumstances, following the pandemic, the executive may exceed this threshold with the approval of Parliament.

It is a break with the economic policy of Germany, which for 10 years had championed budgetary rigor in Europe.

Because of the crisis caused by the pandemic, the government was forced to vigorously support its economy.

Berlin has released nearly 1,000 billion euros in business aid and launched a massive $ 130 billion recovery plan.

Therefore, the country's debt will soar next year, it is expected to reach 75% of its GDP.

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• Germany

• Finance

• Coronavirus

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