Germany's Debt Brake

How Germany's constitutional debt brake limits government borrowing, why it was introduced, and why it was loosened in 2025 for defence and infrastructure.

Germany is known for fiscal caution.

The debt brake

In 2009, Germany added a debt brake (Schuldenbremse) to its constitution:

The federal government’s structural deficit is limited to 0.35 percent of GDP.
States (Länder) must run balanced structural budgets.
Exceptions allowed for emergencies, like the pandemic.

Why

Concerns about rising debt and ageing.
German cultural preference for thrift; the German word “Schulden” means both debt and guilt.

Criticism

Underinvestment: Germany’s roads, bridges, railways and digital infrastructure fell behind.
Deutsche Bahn delays and broken bridges became symbols.

Court ruling

In 2023, Germany’s constitutional court ruled that reallocating unused pandemic credit to climate funds violated the debt brake, causing a budget crisis.

2025 reform

In March 2025, parliament amended the constitution to exempt much defence spending from the debt brake and create a 500 billion euro infrastructure fund.

The crumbling bridge

A major motorway bridge in western Germany is closed because of structural damage, forcing trucks on long detours. Critics blame years of underinvestment.

Thinking low debt is always good

Too little borrowing can mean underinvestment in infrastructure.

Key takeaways

The 2009 debt brake limits structural deficits to 0.35 percent of GDP.
It reflects fiscal caution.
Critics blame it for underinvestment.
In 2025, defence was exempted and a 500 billion euro infrastructure fund created.