Germany's Scholz: debt ceiling will not cap our defence spending

MUNICH (Reuters) -German Chancellor Olaf Scholz on Saturday predicted that a new government would create an exemption for spending on defence and security when dealing with the nation's constitutional limit on public debt.

Scholz said he was sure that the country's future leadership, to be determined at a February 23 election, would put additional exemptions into place to loosen the so-called debt brake, as Germany and other European nations grapple over their response to Russia's attack on Ukraine.

"I am predicting this today, there will be majority support for this after the election," he said in a speech at the Munich Security Conference.

"The debt brake that is enshrined in the German constitution includes exceptions for emergency situations. A war in the middle of Europe is an emergency, what else would it be?" said Scholz.

The snap election this month follows the collapse of Scholz's three-way coalition late last year, partly because the pro-business Liberal Democrats sought to limit spending amid a push by Scholz's Social Democrats and the Greens to boost the defence budget.

The conservative CDU/CSU alliance led by Friedrich Merz, which is ahead in polls with around 30% support, has signalled that it is open to adjustments to the debt limit but generally wants to keep it in place.

The role of Germany and its European allies in the support of Ukraine has come into focus after a call on Wednesday between U.S. President Donald Trump and Russian leader Vladimir Putin over how to end the war in Ukraine.

(Reporting by Ludwig Burger and Andreas Rinke, editing by Thomas Seythal, Kirsten Donovan)

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