And projections indicate Germany’s combined new debt for 2020 and 2021 could approach an eye-watering £270billion. Finance Minister Olaf Scholz is said to be working on radical plans which if implemented would confound Germany’s reputation as the masters of fiscal prudence, according to a source familiar with the matter.
The precise debt figure for 2021 is still subject to negotiations within the coalition government led by the CDU’s Angela Merkel.
However, SPD leader Mr Scholz is trying to avoid net new debt exceeding £90billion in 2021, the source said.
The step will require another suspension of Germany’s constitutionally enshrined debt limits after Berlin already abandoned them this year.
Mr Scholz is determined to stick to the fiscal rules from 2022 onwards, the source stressed.
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A finance ministry spokesman declined to comment.
Mr Scholz has already asked Germany’s legislature, the Bundestag, to suspend the debt brake in the constitution and allow the federal government to take on record new borrowing of some £194 billion.
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The finance ministry plans to update its tax revenue estimates next week.
The publication of the figures will be followed by Mr Scholz’s proposal for the federal government’s budget in 2021, which the cabinet is expected to pass on September 23.
Speaking last month, Mr Scholz appeared to contradict Mrs Merkel when talking about the European Union’s £667billion coronavirus rescue package, stressing joint borrowing was a long-term measure rather than a short-term solution.
Critics in the north of the bloc have been alarmed at the concept, fearing such an approach would effectively bankroll high levels of public spending in the south.
Mr Scholz told the Funke newspaper: “The Recovery Fund is a real step forward for Germany and for Europe, one we won’t go back on.
“These steps forward will inevitably lead to a debate about joint resources for the EU, something that’s a condition for an improved European Union that works better.
“The EU must be able to act collectively.
“For that we need to have qualified majority voting in foreign and budgetary policy, rather than enforced unanimity.”
By contrast, Mrs Merkel is much less keen on the idea – speaking about the recovery package at a press conference in May, her spokesman Steffen Seibert insisted: “It is distinctly different from joint borrowing.”