(Bloomberg) -- Germany’s finance chief doubled down on his opposition to joint European Union debt sales, saying that the government in Berlin has “democratic and fiscal problems” with the proposal published Monday by former European Central Bank President Mario Draghi.
Speaking Tuesday in the lower house of parliament, Finance Minister Christian Lindner said regular common EU bond issuance would be unwelcome for two reasons: It would shift political responsibility for economic policy to the European level and potentially lead to excessive borrowing across the bloc.
“Each individual EU member state must continue to bear responsibility for its own public finances,” said Lindner, who is the chairman of the business-friendly Free Democrats, the smallest party in Chancellor Olaf Scholz’s three-member ruling coalition.
“Liability is not only an important instrument in the private sector to avoid irresponsible risks, but the same also applies between nations,” he added.
In his report on competitiveness, Draghi on Monday urged the EU to invest as much as €800 billion ($883 billion) extra a year and commit to sales of joint bonds to help make the bloc more competitive with China and the US.
As well as Lindner, a self-styled fiscal hawk, neither of Germany’s other two parties in government are keen on the idea, even if Economy Minister Robert Habeck — a member of the Greens who is also the vice chancellor — said he supports Draghi’s call for investments in Europe in principle.
The current conservative opposition, which leads in the polls ahead of next year’s national election, is also skeptical. An objection to more joint borrowing was part of their European election campaign this year.
Lindner told Bundestag lawmakers that Germany must remain “an anchor of stability” for the EU and set an example with its fiscal prudence. He was presenting the government’s 2025 budget and mid-term financing plan, which the ruling coalition agreed on last month after weeks of squabbling over limited funds.
The budget draft still includes a financing gap of at least €12 billion and Lindner said the government is banking on the shortfall narrowing due to stronger than expected economic growth and tax revenue. It also expects to gain about €9 billion from lower-than-projected outflows of earmarked funds.
Net new federal government borrowing is penciled in at €51.3 billion in 2025, up from €50.3 billion this year though still within the limit set out in Germany’s constitutional rules, known as the debt brake. Net borrowing is seen declining steadily after next year and is projected to be just under €30 billion in 2028.
The debt brake “is a form of self-discipline mechanism,” Lindner said. “Only when we are able to secure the sustainability of our public finances can we be in a position to act in times of extraordinary crisis.”
If growth fails to accelerate later this year as the government hopes, a mechanism within the debt rules could allow the government to increase new borrowing.
The latest finance plan — the ruling coalition’s final budget before the election due at the end of September 2025 — is expected to be approved by lawmakers in both houses of parliament by the end of the year.
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