T HE MOOD music had grown so ominous that the shock was somewhat muted. After weeks of dismal survey and industrial-output numbers, it was little surprise to learn on August 14th that Germany’s GDP had contracted by 0.1% in the second quarter of 2019 compared with the previous three months. The economy has been essentially flat over the past year. Household spending, bolstered by wage growth in a tight labour market, has held up but the slump in manufacturing, which represents over one-fifth of output, is deepening. Companies are cutting work hours and issuing profit warnings. Many analysts think Germany is heading for outright recession.

This has triggered two debates. First, are Germany’s woes home-made or imported? A year-on-year 8% slump in exports appears to be the main driver of the slowdown. The uncertainty spawned by the US -China trade spat and the prospect of a no-deal Brexit are largely out of the hands of Angela Merkel’s government. Demand for German products in China is slowing. Germany will be badly hurt if Donald Trump follows through on his threat to whack tariffs on car imports later this year.

Yet this is only half the story. Analysts have long urged Germany to wean itself off its export-dependence. Despite a mild rebalancing, the current-account surplus still stands at a whopping 7.4% of GDP in the world’s fourth-largest economy. Coddled by government, the automotive industry, which runs a larger trade surplus than any other export sector, has been slow to adjust to the rise of electric and autonomous cars. Politicians, from Mrs Merkel down, have done too little to ready an ageing society for challenges like digitisation. Every euro-zone economy is buffeted by headwinds, but so far Germany’s is the only one to have contracted in the past quarter.

A second discussion is raging over the German government’s steadfast aversion to borrowing. The “debt brake”, enshrined in the constitution since 2009, rules out borrowing to finance the structural deficit beyond 0.35% of GDP . A related political commitment, the schwarze Null (“black zero”), pledges a balanced budget for current spending. This has ensured low debt and, since 2014, a surplus that last year stood at 1.7% of GDP , or €58bn ($66bn). Germany has thus been able to raise spending on infrastructure, social security and defence without extra borrowing. Yet as the euro zone’s largest economy grinds to a halt, the debate over whether to open the spigots further is gathering pace.

So far the government remains unmoved. But Sebastian Dullien, director of the IMK research institute in Düsseldorf, says the pressure will increase. Reuters recently reported that a climate-change package due next month might include a pledge to issue fresh debt. This week Mrs Merkel said her commitment to a balanced budget remains intact, but added: “We will react depending on the situation.” Inside the finance ministry a lively debate has begun over how and whether to raise investment—although the minister himself, Olaf Scholz, remains cautious, to the disappointment of many in his Social Democratic Party (the junior coalition partner to Mrs Merkel’s Christian Democrats). Outside government the Greens are urging a massive boost to investment in climate protection. The government’s budgetary rules are “voodoo fiscal policy”, said Robert Habeck, the party’s co-leader, this week.

A short-term bump in spending, as Mrs Merkel argues, would rub up against bottlenecks in areas like construction. Nor would it help remove the pall of uncertainty facing German firms. So some analysts want a credible, possibly cross-party, commitment to establish a fund that would disburse several hundred billion euros over the next decade. Possible targets include transport infrastructure, broadband networks, house building and help for local governments struggling under debt loads. Other ideas include cutting taxes on Germany’s army of low-paid workers or its corporations, or introducing incentives for climate-friendly policies like retrofitting buildings and clean fuel.