Merkel Says CDU Won't Allow New German Debt in Pact With SPD

(Bloomberg) -- German Chancellor Angela Merkel said her party bloc won’t allow budget deficits in a prospective government with the Social Democrats, even after ceding the Finance Ministry to them.

Addressing a rally of her Christian Democratic Union in eastern Germany on Wednesday, Merkel touted last week’s draft coalition deal for returning the Economy Ministry to her party. That would give her CDU-led bloc a key role in confronting challenges to German industry such as China’s push into areas like artificial intelligence, she said.

Giving up the finance post after eight years was the price to pay for renewing a government alliance with the Social Democrats, Merkel told the 1,200 party members in the town of Demmin, near her electoral district.

“If the Social Democrats also occupy the Finance Ministry in the future, our budget lawmakers will have to be even more careful that they don’t pile on new debt on the backs of our children and grandchildren,” said Merkel.

“But I’m quite confident that this will succeed. The black zero is the trademark of the CDU, and it will remain so in the future,” she said, referring to a balanced budget.

CDU Footprint

Faced with a backlash against a coalition agreement that handed three major ministries to the SPD and with calls to start thinking about a successor, Merkel is under pressure to show her bloc’s footprint in the planned alliance, which requires approval by the SPD’s rank-and-file members.

Too little attention has been paid to the accord’s policy details, which will bolster the German economy in areas such as digitalization, she said.

“We as Christian Democrats will turn the Economy Ministry once again into an institution where one will be proud of Ludwig Erhard,” Merkel told the crowd. Erhard headed the ministry under CDU chancellor Konrad Adenauer and is considered the father of West Germany’s “economic miracle” after World War II.

Likely contenders for the post include Peter Altmaier, Merkel’s chief of staff and acting finance minister.

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