Merkel “Open” To Scrapping Germany’s “Zero-Deficit Rule”

This should get the market’s attention.

Seemingly answering Christine Lagarde’s call, European media organizations are reporting that Chancellor Merkel has signaled that she is ‘open’ to suspending Germany’s ‘zero-deficit rule’ – better known as the ‘debt break’ – to bolster the fight against the coronavirus.

A few days ago, Germany announced the first coronavirus death on German soil, and a German traveler also reportedly succumbed to the virus in Egypt.

This isn’t the first time that Merkel has hinted at fiscal stimulus in recent months, and her finance minister has said that scrapping the debt break would be necessary to avert a European recession. Now, the virus has seemingly given Germany and other spending-averse European nations the excuse politicians needed to open the taps. After all, interest rates are so low, people are practically being paid to borrow.

#BREAKING German Chancellor Merkel says open to scrapping zero-deficit rule to fight #coronavirus pic.twitter.com/SWz9tp5EZm

— AFP news agency (@AFP) March 11, 2020

Reports about Merkel’s comments hit just after she held a press conference where she warned that up to 70% of Germans could contract the virus, according to the most severe predictions, and that Germany must do everything in its power to slow the spread.

However, even as Italy’s neighbors closed their borders and Italy’s leaders impose travel restrictions internally across the entire country, Merkel insisted that closing borders within Europe is not the answer.