German
finance minister doesn’t rule out emergency borrowing as ‘Trump’s irresponsible
war’ bites
An
emergency declaration would allow the German government to get around
constitutional debt limits.
April 29,
2026 4:04 pm CET
By
Geoffrey Smith
Germany
will borrow like never before over the next four years — and may have to raise
yet more money to cope with the strains of U.S. President Donald Trump’s
“irresponsible war” in Iran, center-left Finance Minister Lars Klingbeil said
Wednesday.
"We
will need to continue to monitor closely how this war affects our economic
development and the overall state of our country," Klingbeil said in
Berlin in response to a question about whether Germany’s centrist coalition
government is prepared to declare an emergency that would allow for additional
borrowing.
While
Klingbeil said the German government has no concrete plans for such a move, he
did not entirely rule out an emergency declaration that would permit the
government to set aside remaining constitutional limits on borrowing, given the
extreme uncertainty facing Europe’s largest economy.
Klingbeil’s
comments are likely to irritate his coalition partners in German Chancellor
Friedrich Merz’s Christian Democrats, who have rejected calls from the left for
additional borrowing. The conservatives are under pressure from the far-right
Alternative for Germany (AfD) party — now leading in many national polls —
which has frequently attacked the chancellor for taking on hundreds of billions
of euros of debt in an effort to stimulate growth.
Berlin is
now putting the defibrillators on an economy facing a fourth straight year of
stagnation. It will borrow nearly €200 billion next year under the outline of a
budget draft agreed on Tuesday by ministers, and another €600 billion over the
next three years.
Of that,
some €85 billion will be borrowed by new "special funds" earmarked
for spending on infrastructure and defense, as Berlin tries to make up for
decades of underinvestment in both areas.
At the
start of the year, the government had to reckon with over 1 percent growth, but
Klingbeil lamented that it had had to halve its forecast due to "Trump’s
irresponsible war on Iran and the worldwide energy price shock that it has
caused."
"This
is not our war, but we are massively feeling its effects," he said.
Klingbeil
also said that the tariffs raised by the U.S. President last year are having a
profound effect on Germany’s export-driven economy. His new budget aimed to
make the economy "more resilient" and looked forward to a time
"when we don’t have to let ourselves be blackmailed by the USA," he
added.
The
budget outline also incorporates a broad range of measures to cut spending and
raise money in other ways to plug various financing gaps, notably in the
country’s health system, which is set to receive the proceeds of a new tax on
sugary drinks.
Johanna
Treeck contributed reporting.
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