German industry raises pressure on Merkel to ditch policy of no new debt

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Germany should ditch its policy of not taking on new debt in light of zero borro...

FILE PHOTO: BDI president Dieter Kempf addresses the German Industry Day, hosted by the BDI industry association in Berlin, Germany, June 4, 2019. REUTERS/Fabrizio Bensch

Chancellor Angela Merkel’s ruling coalition faces growing calls at home and from abroad to abandon its self-imposed “black zero” budget policy of no new borrowing and instead take on new debt within the limits of the more formal debt brake as a way to help a slowing economy teetering on the brink of recession.

“Under the rules of the debt brake, the government could raise between 10 and 12 billion euros a year, which Berlin could use for public investment,” Kempf told members of the foreign press association in Berlin. At the same time, the country was facing massive pent-up investment needs and investors were willing to even pay Berlin a premium for issuing debt as German bond yields across the board turned negative, Kempf said.

 

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