Hi, I'm Ryan Boyle, Chief US Economist of Northern Trust. Don't let my Irish family name fool you. I have a number of connections to Germany, by birth and by marriage. I have visited many times and always came away impressed by German industry. Their exports of vehicles and specialty machinery are among the best in the world. 

Germany has also been a world leader in fiscal restraint. But this orientation has been recently challenged by a changing economic and geopolitical landscape. For the first time in decades, Germany appears poised for a spending spree. 

History has informed Germany's attitudes towards debt. Its experience of the last century led to a frugality that became deeply institutionalized. In 2009, the German Constitution was amended to adopt a concept known as [GERMAN], or black zero. The mandate calls for a balanced budget with limited exceptions. 

The Constitution also contains the [GERMAN], or debt brake, which forbids the government from taking on any new debt or spending if the nation's deficit exceeds 0.35% of its gross domestic product. This rule is very conservative. The average deficit to GDP ratio across European Union nations is near 4%. The United States currently exceeds 6%. 

Germany's restrictions on itself were much more limiting than the requirements placed on all nations that use the euro currency. German leaders have strictly abided by these policies, even running a surplus for several years preceding the COVID-19 disruption. 

In terms of personal finance, thrift is a smart core value. But if every economic participant chooses to save, the whole economy slows down. This can be very limiting during intervals of economic challenge. In those instances, governments can use their capacity to borrow and spend to arrest decline. 

To maintain compliance with its constitution, Germany Has kept its tax burdens relatively high. Meanwhile, a lack of government spending has limited the nation's economic output, infrastructure quality, and military strength. This has inhibited potential not only in Germany but the whole of the euro area. 

In the wake of the prevailing winds from Washington, Germany has now reconsidered its budget priorities. The nation has amended its constitution to allow defense spending to be exempt from its deficit restrictions. Germany will charter an infrastructure fund worth EUR 500 billion. German states will gain the ability to run modest budget deficits. 

Taken together, these measures will provide substantial stimulus. Early estimates suggest that they could eventually add more than 1% to annual real growth. The prospect of higher deficits caused a rapid repricing of German bonds. Still, German interest rates remain well below those in other countries. And even with new spending, Germany's ratio of debt to GDP is well below that seen elsewhere. 

Germany's fiscal caution put it in a good position to respond to changing circumstances. In opening its budget, Germany hopes to remain a leader, this time for economic adaptation.