“The new federal government will significantly increase spending on defense in the coming years, which would widen the already considerable hole in financial planning. As the emerging new coalition of CDU/CSU and SPD will not have a 2/3 majority in the Bundestag, even with the support of the Greens, it would have to rely on the support of the Left Party to set up new special funds or relax the debt brake, although this is likely to come at a high political price. We are discussing various scenarios as to how this problem could be tackled. The dispute over the federal budget was the trigger for the break-up of the former coalition. The SPD, Greens and FDP were unable to agree on how the hole in the federal budget, which was estimated at up to 26 billion euros, should ultimately be closed. The new federal government will now have to tackle this problem. This will be made more difficult by the fact that the federal government will probably have to significantly increase defense spending again in the coming years. It may not end up increasing to 5% of GDP, the number US President Trump has called for.“
Morten W. Langer
