Germany’s Scholz Bids to Ease Debt Brake In Stimulus Salvo

German Finance Minister Olaf Scholz is considering a move that could open an avenue for limited fiscal stimulus in Europe’s largest economy, Bloomberg News reported. Scholz wants to temporarily suspend the constitutional mechanism that restricts the country’s debt levels in order to provide relief for indebted regions, according to an official familiar with the plans. The initiative, which is likely to face strong political opposition, would shift borrowings from municipalities to the federal government, giving them more budget space to invest locally. Lawmakers informally assessed the cost of the measure at about 20 billion euros ($21.8 billion). “We would expect heated discussions about the level and distribution of support, as well as moral hazard problems,” said Christian Schulz, an economist at Citigroup Inc. Read more

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