German CDU leader: Debt rules only allow limited fiscal leeway

German Defence Minister Annegret Kramp-Karrenbauer attends a budget session at the lower house of parliament (Bundestag) in Berlin, Germany, September 10, 2019. REUTERS/Fabrizio Bensch

BERLIN (Reuters) - The leader of Chancellor Angela Merkel’s Christian Democrats (CDU) has poured cold water on hopes that Berlin could soften its fiscal stance and consider taking on new debt to finance a costly climate protection package.

“The debt brake allows the federal government a certain amount of leeway, but it is limited constitutionally. The scope is narrow,” CDU chairwoman Annegret Kramp-Karrenbauer told Focus magazine.

Asked whether the federal government would have to give up its balanced budget goal to finance the planned climate protection package, Kramp-Karrenbauer said: “The black zero policy (of not taking on new debt) in the framework of the debt brake remains our benchmark.”

Her comments followed a Reuters report on Monday that said Berlin may set up independent public bodies to take on new debt and boost investment in climate protection and infrastructure, without falling foul of its strict national spending rules.

Reporting by Michael Nienaber; Editing by Toby Chopra