A man-sized cut-out of a black zero once stood proudly in the centre of Stuttgart — a symbol of Germany’s fixation on balanced budgets.
But a decade later, the cardboard statue is gathering dust in a government storage room, wedged between spare television screens and boxes of Christmas decorations.
The Schwarze Null’s quiet retirement encapsulates the seismic shift under way in Europe’s largest economy: once a staunch defender of fiscal conservatism, Germany has loosened its fiscal rules and embarked on a massive debt-fuelled public spending programme in response to economic and geopolitical shocks.
“It is a massive deviation from this German idea of budgetary discipline,” said Andreas Rödder, a historian close to the more conservative wing of the Christian Democrats, the party of Angela Merkel and Germany’s incoming chancellor, Friedrich Merz.
Merz, who only a few months ago was still defending the country’s strict debt brake, has shocked many in Germany with the pace of his actions — swiftly pushing through constitutional reforms to unlock up to €1tn in additional borrowing over the next decade for defence and infrastructure.
“Merz’s narrative is that he wants to signal German agency in these times of turmoil. But it marks a cultural deviation. The CDU is getting rid of the basics, of what has been their DNA,” said Rödder.
In Stuttgart, the Black Zero statue was created by the state finance ministry of Baden-Württemberg in 2014 to celebrate the fact that it had reached a balanced budget several times in the previous years.
That fiscal discipline was mirrored in Berlin by finance minister Wolfgang Schäuble who that same year balanced the country’s budget for the first time since 1969. When he left office in 2017, ministry staffers in Berlin formed a human zero to celebrate his achievement.
But by the time Green politician Danyal Bayaz became Baden-Württemberg’s finance minister in 2021, the Black Zero felt increasingly anachronistic. Home to Porsche and Mercedes-Benz, the region was reeling from the Covid-19 pandemic lockdowns and supply chain disruptions.
In Brussels, Germany had already agreed to unprecedented EU joint borrowing of €800bn to revive the bloc’s economies. In Berlin, the government of Angela Merkel had unleashed a €550bn emergency spending package.
Bayaz’s team first decided to repaint the statue green, then to remove it from view altogether.
The state minister admits that he was no fan of the Schwarze Null. While he could get behind fiscal discipline and leaving “no debt to future generations”, he said that “leaving them a broke planet and a broken educational system is a bad deal for them”.
“That’s why I didn’t like the symbol much,” Bayaz told the FT. “It was outdated.”
For Bayaz, a reform of the debt brake, which limits Germany’s structural deficit to 0.35 per cent of GDP, was inevitable in the face of a stagnating economy, higher Nato spending requirements and the poor state of the country’s roads and schools.
“It was not a question of politics, it was a question of physics that this would happen,” he said. “But I didn’t expect that it would come days after the election.”
Polls suggest that most Germans back the debt package, but remain sceptical over the ability of Merz and his coalition partner, the Social Democrats, to make good use of the money.
Support for Merz and his CDU party has eroded since the February elections, with the far-right Alternative for Germany, which has opposed his spending package, for the first time polling ahead of the conservatives this week.
“Although the deal between the CDU and SPD on the financing of projects are supported in principle, there is still no clear course or convincing concept for how the modernisation of the country is going to be conducted,” said Manfred Güllner, the head of Forsa pollster.
Fiscal rectitude had been so long front and centre of German dogma that even Green politicians lambasted Merz for abandoning it. “Wolfgang Schäuble would turn in his grave,” Green party co-head Franziska Brantner said in a parliamentary debate before approving Merz’s spending package.
Brantner vowed to defend the Swabian housewife — a national symbol of thrift who only spends as much as her husband earns. In 2008, then-chancellor Merkel also invoked the leitmotif to justify the tightening of fiscal rules in the wake of the global financial crisis.
Regina Walz, a self-declared Swabian housewife who has returned to part-time work after raising five children, told the FT she was in favour of more investment in infrastructure. But she was alarmed a the size of the debt burden and opposed to using the money for weapons.
“If I go into debt, I have to know what for,” she said. “This debt package will be OK if it is used for our economy. But I don’t want to help fund any war and I think we have enough weapons.”
It is not the first time a postwar politician embraced big spending. In 1990 then CDU chancellor Helmut Kohl set up a special fund to help finance the cost of German reunification, estimated at €2tn.
The debt accumulated in the Kohl era fuelled the debate that eventually led to the Black Zero and, in 2009, to the debt brake being enshrined in the constitution.
“At the start of the 2000s, there was this feeling that we needed to control budget spending more,” said Nils Schmid, the Social Democrat who ran the finance ministry in Baden-Württemberg when the Schwarze Null statue was erected to celebrate the fact that he had achieved a balanced budget twice before. He would go on to repeat the feat in 2015 and 2016.
Other senior SPD politicians including Olaf Scholz, who served as Merkel’s finance minister before becoming chancellor in 2021, also embraced strict fiscal rules as a way to prevent the conservatives from offering tax cuts, Schmid said.
By 2016 when the debt brake took effect, Germany’s growth had picked up while interest rates had reached all-time lows. Balancing budgets was no hard task.
“Looking back, we’ve come to the conclusion that the debt brake did not allow enough room for manoeuvre, especially for military spending. It only worked when economic conditions were very favourable,” Schmid said.
CDU finance minister Schäuble “was the hero of the black zero, but this was in the time of peak globalisation. Germany was selling cars to every corner of the world. We enjoyed the peace dividend”, Bayaz said. “It’s a different time now.”
Werner Gatzer, the top official in charge of the budget under Schäuble, remembers when he told his boss that not only had the budget been balanced, it had generated a surplus.
“He wasn’t thrilled, he said ‘Oh God, I’m already being criticised for investing too little. And now this.’ But then he noticed that this was popular,” Gatzer said.
Gatzer noted that the debt brake had allowed Germany to reduce its debt ratio to about 63 per cent of GDP, which in turns means that Berlin can borrow at lower rates than France or Italy.
In Gatzer’s view, the problem was that politicians lacked “the strength to set priorities”. “The debt rule was never an investment brake,” he said. Still, areas such as infrastructure, digitisation and defence “were not adequately financed”.
He expressed confidence that Schäuble, who died in 2023, would have backed Merz’s debt package: “He would say yes to investments in infrastructure and defence.”
In Stuttgart, the home of the proverbial Swabian housewife, minister Bayaz expressed concern about Germany’s spending spree missing the opportunity to push for reforms.
“I see people with euro signs in their eyes.”
Data visualisation by Keith Fray
