The German Christian Democrats (CDU) are under pressure both by their coalition partners, the Social Democrats (SPD), and by the opposition Greens to abandon the zero-deficit policy amid signs of a recession.

German Finance Minister Olaf Scholz said on Monday that Berlin could invest in energy infrastructure and take measures against climate change without issuing new public debt. Chancellor Angela Merkel’s spokesman, Steffen Seibert, asserted that a balanced budget continues to be the government policy. The new leader of the CDU, Annegret Kramp-Karrenbauer, echoes the view that Berlin must stick to its zero-deficit policy.

The German government has decreased debt-to-GDP ratio thanks to export-led growth, record-high employment, buoyant tax revenues and the European Central Bank’s bond-buying plan. Although German 10-year bonds offer negative yield – investors are willing to pay to hold German debt – the government is resisting calls to borrow in order to provide a national and European stimulus.

The leader of Germany’s surging Greens party, Robert Habeck, is calling for massive investment on energy transition. According to a Forsa poll published last Friday, the Greens poll at 25%, that is, one point below the CDU/CSU. As the CDU has made clear it would not work with either the far-right Alternative for Germany (AfD) or the far left Die Linke, the Greens appear to be the only possible coalition partner for the next German government.

Meanwhile, the finance ministry, led by the Social Democrats (SPD), is considering the issuance of new debt. Merkel’s junior coalition partners are even considering quitting the government over fiscal policy.