German chancellor candidate predicts new debt crisis for Europe

Friedrich Merz, Germany’s likely next chancellor, said he’s “very worried” the European Union is heading for another financial crisis because governments have taken on too much debt, Politico writes.

“We cannot be as careless with our public finances as perhaps some of the others — and even with others, I’m starting to get very worried,” Merz noted.

As noted, the politician didn’t name the other countries he was talking about but six in the EU — France, Italy, Greece, Belgium, Spain and Portugal — have debt that’s bigger than the size of their yearly economic output. “The next financial crisis is definitely coming,” he said. “It will be a sovereign debt crisis. We don’t know when it will come. We don’t know where it will come from, but it will come.”

With five days to go before Germany’s general election, Merz’s comments come amid a debate on reforming Germany’s so-called debt brake, the strict spending rule which limits the federal government’s structural net borrowing to 0.35 percent of gross domestic product. The discussion has become all the more urgent because of U.S. demands the EU pay more for its own defense. There’s also wide variation in their positioning on migration, with Merz vowing to close Germany’s borders on the first day of his tenure and the Greens considering such plans illegal, making a coalition with the center-left SPD — whose leaders have recently taken a tougher stance on tackling illegal migration — more likely.