(Bloomberg) -- German Chancellor Angela Merkel’s administration is prepared to abandon its long-standing balanced-budget policy to help finance measures to contain the fallout of the coronavirus.

Given the dimension of the crisis, Merkel and her economic team are now willing to accept deficit spending to help finance containment measures, according to people with direct knowledge of the government’s economic policy. The virus-triggered crisis is one of the “exceptional circumstances” under the constitutional debt brake that allows for additional borrowing, said the people, who requested not to be named because the discussions are not public.

While Merkel’s government is ready to explore additional spending, no decisions have been made on specific measures or an amount. The government did not immediately respond to requests for comment.

The change in stance amounts to a u-turn for Merkel’s Christian Democratic-led bloc which for years has upheld fiscal discipline as one of its mantras. Party members have even said that the balanced budget policy, known as the black zero in German, is a fetish of theirs.

Even when Germany flirted with a recession last year, Merkel resisted calls from Washington, the European Central Bank and the International Monetary to loosen its pursue strings. Over the past decade, its savings have cut public debt by more than 20 percentage points to less than 60% of gross domestic product. Last year, Berlin recorded a budget surplus of more than 13 billion euros.

The new stance does not mean that the government is planning to launch a massive stimulus program. In fact, the government still has as much as 50 billion euros ($56 billion) in reserves that it could tap before raising new debt. But it does mean that it can ramp up spending beyond budgetary limitations, the people said.

“We don’t want to give it up light heartedly, but what needs to be done will be done,” Andreas Jung, deputy leader of the Christian Democratic-led caucus in parliament, told NTV television on Thursday in reference to the zero deficit policy.

Merkel on Wednesday gave her first indication of a change in attitude when she said that the government would do “whatever is necessary” to combat the crisis triggered by the virus.

The ECB on Thursday will announce its monetary response to protect the region’s economy.

Read More:

  • The Plot to Scrap Germany’s Balanced Budgets Has Already Begun
  • Lagarde Set for All-Out ECB Action on Virus: Decision Day Guide
  • Merkel Says Germany Will Do Whatever It Takes to Fight Virus

Government officials in recent days have said that they will still look for clear evidence of a deep economic crisis before unleashing classic stimulus measures.

(Updates with context, lawmaker quote, graphic)

To contact the reporter on this story: Birgit Jennen in Berlin at bjennen1@bloomberg.net

To contact the editors responsible for this story: Ben Sills at bsills@bloomberg.net, Raymond Colitt, Chad Thomas

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