| Once again, the German government has used accounting tricks to reconcile its spending wishes with the rules of its constitutional ‘debt brake’ – but unlike the tricks faulted by the country’s Constitutional Court last year, this time experts say it’s waterproof. Last Friday (5 July), the heads of the three-party coalition, the SPD, the Greens, and the liberal FDP, announced after an all-nighter they had reached a deal on the 2025 budget. Unlike previous expectations, this did not include major austerity measures but turned out to be only slightly smaller than this year’s budget of €489 billion (which was also increased from €476 billion). “This came to the surprise of everyone,” Jens Südekum, a professor for international economics at Düsseldorf University, told Euractiv. How is that possible, notably given the tough stance of Finance Minister and self-proclaimed “fiscal hawk” Christian Lindner (FDP/Renew), who made his stay in the coalition conditional on fulfilling the ‘debt brake’, the country’s strict limit for structural deficits, to 0.35% of GDP per year? “Lindner, from my interpretation, has barked that he is the guarantor of the debt brake, but in the end, he did not really bite hard but proved quite flexible,” Südekum said. To explain the mystery, it is necessary to look into the fine print of the agreements, which includes 7-8 instances of what Südekum calls “budgetary finesse, or legal ‘tricks’, if you will”. These include a “global budget reduction” of €16 billion, i.e. a commitment to spend less than what is written into the text (without specifying where) – double what is usually counted in. It also includes some technical changes on how to account for the economic cycle in the debt brake, which increases fiscal leeway by another few billion euros. | 