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German Chancellor Angela Merkel's government has been trying to increase public spending without issuing new debt since 2014, thanks to exceptionally long growth cycles, record employment levels, strong taxes and the European Central Bank's debt-buying program.
But with German borrowing costs almost daily at record lows, weakening external demand and trade disputes leading to the cooling of the country's economy, calls from home and abroad are rising for Germany to bear a small deficit again and introduce additional fiscal stimulus measures.
"The challenge now is to get fiscal policy to reflect this fundamental change without opening the floodgates of the federal deficit," said the official, who understands discussions within the Treasury and asked for anonymity.
"Because once people understand that borrowing new debt is no longer a taboo, they will ask for more money."
To this end, the German government will link any new debt with the climate protection plan expected to be finalized by Merkel's cabinet next month and impose strict restrictions on new debt, the official said.
Merkel's coalition government hopes to gradually abandon the impact of coal fuels over the next 20 years and invest at least 40 billion euros ($45 billion) in affected areas to help them move from fossil fuels to other fuels.
The smaller parties in the coalition government, the Social Democratic Party (SPD) and Finance Minister Olaf Scholz, have also advocated spending to mitigate the social impact of the new carbon pricing system on low-income families.


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