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IW study recommends slow repayment of corona national debt


According to the Institute of German Economy, the state will have incurred around 650 billion euros in new debt between 2020 and 2022. In order to cope with this, "future-oriented investments" are necessary.

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Among other things, restaurateurs receive state aid because of the Corona closings

Photo: Hauke-Christian Dittrich / dpa

The debt brake anchored in the Basic Law has already been lifted for 2020 and 2021 and it is likely to fall again in 2022.

The German Economic Institute (IW), which is close to the employer, advises the federal government to relax the debt brake in view of the immense corona debt.

"It needs future-oriented investments so that Germany can cope with the Corona debt," said IW Director Michael Hüther, who presented the study "Who pays for the crisis?" On the national debt.

It is not only the consequences of the pandemic that have to be mastered, but also the economic and social structural change, said Hüther.

In order to cover the high investment deficit, the IW, otherwise known for its conservative budget policy, advocates a Germany fund of 450 billion euros over ten years.

In addition, a moderate relaxation of the debt brake would create the necessary leeway.

The federal states should be allowed to borrow 0.15 percent of the gross domestic product annually.

That would not violate the European fiscal rules and would give some of the heavily indebted countries some breathing space.

The rules of getting into debt

Open the debt brake area

"The budgets of the federal and state levels are basically to be balanced without income from loans," says Article 109 of the Basic Law.

In future, the federal states will no longer be allowed to incur any debts that are independent of the economy, while those of the federal government will be limited to 0.35 percent of gross domestic product.

Valid since

For the federal government since 2016, for the federal states from 2020.


The debt brake has constitutional status.

In economic crises or emergencies such as a natural disaster, the debt can be higher.

But there must be a binding plan for the repayment of the loans.

Debt leeway for Germany (measured against GDP 2018)

Around twelve billion euros for the federal government.


The federal government adhered to the debt brake until 2020.

Since then she has been suspended due to the corona crisis.

Expand Maastricht criteria area

Countries that want to adopt the euro must meet the convergence criteria of the Maastricht Treaty.

Accordingly, the new debt (deficit) may amount to a maximum of three percent and the total debt to a maximum of 60 percent of the gross domestic product.

The Stability and Growth Pact (SGP) means that these requirements must also be complied with after joining the euro.

Valid since

1993 (Maastricht Treaty) and 1999 (SWP).


The Maastricht criteria are anchored in EU law, but have often been violated.

The EU Commission has therefore initiated numerous so-called deficit procedures, which, however, have not had any financial consequences.

Debt leeway for Germany (measured against GDP 2018)

Almost 102 billion new debt and a good two trillion total debt.


Germany broke both rules early on.

Total debt fell below 60 percent in 2019 for the first time in 17 years, but exceeded this level again significantly in the following year due to the corona crisis.

New borrowing was also well above the Maastricht hurdle in 2020 at just under five percent.

Because of the corona crisis, the EU suspended its deficit rules in the pandemic anyway.

Expand area of ​​the Fiscal Compact

The fiscal pact was adopted as a tightening of the stability and growth pact after it was unable to prevent the European debt crisis.

Instead of just adhering to the three percent limit of the Maastricht criteria, the signatories of the fiscal pact should strive for balanced budgets in the medium term.

The state's indebtedness, which is independent of the economy, may not exceed 0.5 percent of the gross domestic product.

If the total debt is well below 60 percent, this limit increases to 1.0 percent.

Valid since



The signatory states must enshrine their goals in the constitution, as Germany did with the debt brake.

For the first time, the Fiscal Compact provides for the possibility of financial sanctions in the event of non-compliance.

So far, no use has been made of this option.

Debt leeway for Germany (measured against GDP 2018)

Almost 17 billion, as long as the total debt is over 60 percent.


So far, Germany has complied with the debt rules of the Fiscal Compact.

They are currently suspended because of the corona crisis.

Area Black zero flaps

If government revenues and expenditures are the same, the bottom line is the proverbial black zero.

In this case, new debts are not necessary.

One also speaks of a balanced budget.

Valid since



The black zero is not a legal requirement.

As a common goal of the Union and the SPD, however, it can be found in the current coalition agreement.

Debt leeway for Germany (measured against GDP 2018)



In the federal government, the black zero was reached in 2014 for the first time in 45 years and held until 2020.

Then the state made new debts of around 130 billion euros because of the corona crisis.

According to the study, the federal government, states and municipalities will probably pile up a mountain of debt totaling around 650 billion euros in the years 2020 to 2022 as part of the fight against corona.

"Depending on what happens in the coming weeks and months, this number can get even bigger," said Hüther.

Already since 1945, the state has never spent so much money on a goal in such a short time as in the corona pandemic.

The question now is how the costs are managed.

IW: Debts should be repaid in 40 instead of 20 years

The Federal Audit Office recently sharply criticized the federal government's high debts.

The budget plans of the federal government stand on "feet of clay".

Although this imbalance was triggered by the corona pandemic, "the lack of necessary reforms in the years following the global financial and economic crisis is now taking revenge."

From 2023, when the debt brake applies again, the federal and state governments want to repay part of the newly borrowed debt.

If all corona debts are to be repaid within 20 years as planned, the state would have to repay 24 billion euros annually - and save elsewhere.

Otherwise it could not be reconciled with the debt brake.

"The current repayment plan is very sporty, but inconsistent and leads to unnecessary macroeconomic problems," warned Hüther.

"Instead of 20 years as planned by the federal government, the debt should be repaid in 40 years," the study also says.

There are also voices from the opposition calling for the debt brake to be loosened.

"The federal government is increasingly becoming an ideological brake block," said the budgetary spokesman for the Greens in the Bundestag, Sven-Christian Kindler.

"Even employers are much further ahead than the dogmatic union and rightly demand an investment-friendly budget policy." After Corona, Germany needs a reform of the debt rules in order to be able to finance more investments in climate protection and digitization.

That helps the economy, people and society.

The IW's proposal to extend the repayment period has met with approval from the German Federation of Trade Unions (DGB), among others.

In contrast to the IW, however, board member Stefan Körzell pleaded for a permanent abolition of the debt brake.

It is a mistake that the employer-related institute refuses to address the state's income.

Crisis profiteers would have to be brought in to cope with the challenges through higher wealth taxes.

apr / Reuters / dpa

Source: spiegel

All business articles on 2021-04-13

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