Scholz: Germany's 'debt brake' budget rules outdated, urges reform

German Chancellor Olaf Scholz described the country's strict rules against government debt as outdated and urged modest reforms in remarks on Tuesday.

The rules against deficit spending were enshrined in Germany's constitution in 2009, amid the fallout from the global financial crisis and the start of the eurozone sovereign debt crisis.

"Nobody would write it again the way it exists today, with all the knowledge we now have today," said Scholz, a centre-left Social Democrat (SPD), at a conference on equal opportunities for women and men in leadership positions.

The so-called "debt brake" rules limit structural budget deficits to no more than 0.35% of Germany's gross domestic product (GDP), although some exceptions allow for greater spending during national emergencies or recessions.

Supporters view the debt brake as a paradigm of fiscal responsibility, while critics contend the limits are overly restrictive and have prevented necessary government investment.

Germany's debt level is well below that of many other Western countries, such as France, Italy, the United Kingdom or the United States.

Scholz said he was confident that a modest adjustment to the debt brake in the coming months, which would require two-thirds majorities in both chambers of parliament to pass.

The free-market liberal Free Democrats (FDP), a junior partner in Scholz's coalition, have been vehemently opposed to any changes to the debt brake.

The opposition centre-right Christian Democrats (CDU) have also been vocal defenders of the rules.

"Let's find the necessary two-thirds majorities in the Bundestag and Bundesrat to do this," Scholz said on Tuesday.