Germany is costing heavy: How will the European Union react?

The new Finance Minister of Germany, Lars Klingbill, arrived Brussels on Monday with a bold message: Berlin is ready to spend big.With a plan to invest € 1 trillion ($ 1.1 trillion) in defense and infrastructure in the next decade, the country is shutting down its long -standing reputation for fiscal restraint.But as the capitals of the European Union digested the scope of the plan, many wonder if Germany is still playing with a lot of rules, it should once follow others.Klingbeel hit a confident tone in his first Eurogrup meeting with Eurozone’s finance ministers in just one week. He planned to cut red tape, reduce the cost of energy and promote Berlin’s plans by addressing shortage of labor. “All this will give rise to more development, and it is also positive for Europe,” he said.The axis of Germany began in January, when Bundestag suspended the country’s constitutional debt break, the foundation stone of the German economic conservative for more than a decade. Supported by a comprehensive political majority, the move freed Berlin to bypass strict lending boundaries. In March, Parliament took the next step, approved a plan to raise € 1 trillion in the new loan.European Union’s fiscal rules tested boundariesThe scale of the scheme now puts Germany on the syllabus of confrontation with the fiscal structure of the European Union. “It sets a dangerous example,” Warned by Brugel Think Tank, a companion and Professor Armin Steinback at HEC Paris Business School.Under the stability and development treaty, member states are expected to have a decrease below 3% of GDP (GDP) and less than 60% loans. The rules were softened during the Kovid -19 epidemic and again after the Russia’s invasion of Ukraine, allowing more fiscal flexibility with Brussels, especially to protect.In March, the Commission revised the rules and activated a so -called National Escape Claus to provide temporary carriage to the member states for especially for safety expenses. Germany argues that its plans come under that realm.Klingbill told reporters, “I think the rules we have changed in Europe clearly say that there is more flexibility now,” saying that reform and high growth capacity would eventually support European stability.Brussels under pressureBut critics are not confident. While new rules provide more flexibility for defense, Germany packages include widespread investment in infrastructure, energy and digitization, areas which are not clearly covered by revised rules. “It moves well what the rules allow,” Steinback said.If the commission signs Berlin’s plan, it can trigger a wave of political backlash. “Special treatment for Germany will reduce the no-discrimination principle of the European Union,” Steinback warned.He said that other countries with high debt levels like Italy or France can demand similar exceptions, potentially weaken fiscal discipline in the block, which created economic crisis.A hard dilemma for EuropeBut curbing Germany’s spending plans is also not an easy option, as they come at a significant time for the European Union. Along with increasing geopolitical tension and economic growth stable, many people in Brussels are expecting economic speed starting from Berlin.Despite being in recession for three years, “Germany remains the most important European country, with the largest economy and heavy capacity,” Brussels-based Center for European Policy Studies (CEPS) of Carl Lanu told DW.However, the question is whether Germany’s expenses would have a meaningful wave effect in other countries, as the Klingbill announced during his visit. Steinback suspects: “Spillover is there, but their magnitude is not clear.”Not restart, but a resetKlingbeal, for its share, insists that it is not a breakdown with the past of Europe. “We don’t need restart in European cooperation, but we want to take it to the next level,” he said.Steinback agrees that improvement requires improvement, but the policy makers urge them not to ignore the system. “Current rules do not reflect new geopolitical reality, especially with the growing defense needs and the return of Donald Trump,” he said.Instead of leaving the framework, he asks for a targeted update: a little more room for national investment, which is combined with European Union-level borrowings for collective defense.But even under the optimistic deadline, they will not kick the changes before the end of next year.Meanwhile, the Commission has to face an important option. Allow Germany to pursue fiscal borders now, or when Europe definitely needs Europe the most, it risks at risk.A decision is expected in summer, but one thing is already clear: Germany’s new fiscal route is re -shaping Europe’s economic debate, and testing the boundaries of rules that help to write it.