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Why the next government will thank Helge Braun

2021-07-03T06:45:27.395Z


The debt brake condemns the next government to save iron. A new study shows that even minor corrections to the credit brake would create “relevant” financial leeway.


Enlarge image

Head of the Chancellery Braun: Fan of a debt brake that has been put on hold

Photo: Frederic Kern / imago images / Future Image

It was at the height of the pandemic when the Chancellor's key adviser came up with a fairly coherent calculation. In order for the economy to recover quickly, social security contributions and taxes would have to remain stable despite the gigantic corona costs, wrote Chancellor Helge Braun in the »Handelsblatt«. And so that everyone understood what that was meant, he added: "The debt brake will not be adhered to in the coming years, even with otherwise strict spending discipline." It would be better, he suggested, to suspend it for a few more years.

What followed was a storm of indignation, especially within our own ranks.

That was "not a majority position," complained Union faction leader Ralph Brinkhaus.

Party leader Armin Laschet also rejected the move.

And Finance Minister Olaf Scholz also made it clear that the Article of the Basic Law suspended due to Corona should apply again from 2023.

The parties will study the study carefully

That is the state of affairs; and yet there is much to suggest that the last word has not yet been said. While Corona tears deep gaps in the social and state coffers, the parties have passed expensive election programs. The SPD wants to guarantee the pension level, the Union modernize the state apparatus, the Greens promote the climate change, the FDP lower taxes. And so the future government politicians will probably carefully study a new analysis of the Düsseldorf Institute for Macroeconomics and Business Cycle Research (IMK) on the subject. The result: Even small changes to today's debt law would open up "financial policy relevant leeway".

The researchers of the union-oriented think tank compared the proposals with which politicians, economists and institutes want to mitigate the budgetary consequences of Corona and allow the federal government to spend more in the next few years. The leading institutes of trade union and business associations have suggested adding an additional state budget for infrastructure investments to the federal budget. According to the study, this would generate a budget increase of almost 20 billion euros by 2025. If the European fiscal rules were also reformed, as is currently being discussed in Brussels, the scope would even amount to almost 80 billion euros.

The increase in expenditure would be even greater if the next government were to take up the suggestion made by Chancellor Braun.

Extending today's exemption would increase the financial leeway for the next federal government by almost 200 billion euros.

The Council of Experts' proposal, on the other hand, to repay the corona debts more slowly than previously prescribed, would only bring the federal government just under four billion euros.

The next government would have to take a sharp austerity course

All of the proposals also enable the federal government to further increase government spending by 2030.

As a result, the ratio of national debt to economic output would be five percentage points higher than it is today.

Nevertheless, the quota would fall below the 60 percent threshold of the Maastricht Treaty again before 2030.

If, on the other hand, the debt brake were to be reintroduced without restrictions from 2023, as currently planned, the next government would have to pursue a sharp austerity course.

In individual years, the federal government would have to raise more than 20 billion euros just to repay the corona debts.

In short: one can assume with some certainty that the politicians will indignantly reject the study from Düsseldorf - only to pull it out of the drawer again after September 26th.

Source: spiegel

All business articles on 2021-07-03

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