The new debt will be written into the budget for 2021, German Finance Minister Olaf Scholz said on Friday.

The move would necessitate a suspension of the so-called debt brake anchored in Germany’s constitution, Finance Ministry sources confirmed.

The mechanism states that Germany’s structural federal deficit must not exceed 0.35 per cent of gross domestic product (GDP), but can be suspended in case of natural disasters or dramatic recessions.

So far, 2020 has already seen the German state rack up record new debts of around 218 billion euros as part of efforts to pull the country out of a deep recession.

Spending has focused on measures to protect jobs and companies in the crisis, as well as investments in future technologies and support for regions.

“Doing nothing would be much more expensive,” the ministry source told dpa.

The government expects to spend a projected 413.4 billion euros across 2021 – close to 19 per cent less than this year.

Economic output in Germany collapsed earlier this year as the world went into lockdown.

The government expects GDP to shrink by 5.8 per cent for the year as a whole, which would be the worst slump seen in Germany since World War II.

The economy is expected to pick up significantly next year, though is not projected to return to pre-crisis health until at least 2022.