An influential advisory body to the German government on Tuesday suggested reforming the country's borrowing rules known as the "debt brake", laying out proposals after the state's finances were upended by a court ruling last year.

The German Council of Economic Experts put forward the proposals just as Finance Minister Christian Lindner was addressing parliament for the final deliberations on the federal budget for 2024 after weeks of turmoil.

"Rarely has a federal budget been discussed as intensively as this one," Lindner said in the German Bundestag.

The debt brake, enshrined in the German constitution, restricts the public deficit to 0.35% of gross domestic product. It will be applied again this year for the first time since 2019.

It was suspended during COVID-19 lockdowns and again in 2023 after a Constitutional Court ruling blocked the repurposing of unused pandemic emergency funds, prompting calls by politicians to reform or even abolish the mechanism.

In the current budget, the debt brake is not only to be reinstated "because it is a requirement of the constitution, but because it is a requirement of economic common sense to act in this way in view of the interest costs we have", Lindner, of the fiscally conservative Free Democrats (FDP), said in his speech.

According to Monika Schnitzer, chair of the Council of Economic Experts, a reform would enable forward-looking public spending without undermining the sustainability of public finances.

The committee proposes, among other things, a transition phase in the years following a suspension of the debt brake.

"A transitional arrangement would provide additional fiscal room for manoeuvre to overcome the crisis and at the same time prevent the constant discussion of declaring emergencies," council member Ulrike Malmendier said.

The experts also proposed an improved method to calculate cyclical adjustments and suggested connecting the country's annual structural deficit to its debt ratio.

This could range from 0.5 to 1%, the experts said. (Reporting by Rene Wagner and Nette Nöstlinger; editing by Matthias Williams and Ed Osmond)