As a reminder, the debt brake serves to cap spending by the government and limits the country’s structural budget deficit. Scholz says that should the Ukraine conflict become worse, the government will have to respond by looking to declare an emergency exception for the budget – which will see the debt brake suspended as it has been since the Covid pandemic.

Scholz notes that the government will be saving €17 billion in its core budget and will also cut spending from its climate and transformation fund. For some context, Scholz was actually supporting the idea for another suspension of the debt brake whereas finance minister Lindner was against it. And that resulted in intense discussions and debate over the matter in recent weeks.

This article was written by Justin Low at www.forexlive.com.