Germany will double its initially planned borrowing for 2021 to help finance businesses hit hard by the second wave of the Covid-19 pandemic, lawmakers said Friday morning.
The parliamentary budget committee has agreed to a debt of €180bn (£160bn), almost twice the originally planned €96bn (£85bn).
This is the second largest amount of net borrowing in Germany since World War II.
Parliament said the high debt was necessary to help businesses struggling under lockdown restrictions and prevent a further contraction of the economy.
Lawmaker Eckhardt Rehberg of Chancellor Angela Merkel’s Christian Democrats (CDU) party said: “We must once against make use of the exemption rule from the debt brake.”
This brake is part of the German constitution and restricts issuing new debt by limiting the federal budget deficit to 0.35 per cent of economic output.
The debt brake was suspended by the German Parliament this year, after it took unprecedented steps to help businesses.
Germany’s second Covid-19 lockdown was introduced in early November, and has been extended this week until 20 December, with all bars, restaurants and entertainment venues remaining shut.
Financial support for closed businesses is to be extended.
Greens party lawmaker Sven-Christian Kindler said: “The new borrowing is the right thing to do. You cannot save your way through a crisis.”