As of: January 30, 2024, 4:20 p.m
Comments
Press
Split
Monika Schnitzer is the chairwoman of the council of economists.
© Hannes P Albert/dpa
Economists are in favor of reforming the much-discussed debt brake.
For many economists, the risk that necessary investments might not materialize simply seems too high.
Berlin - Economists are proposing a reform of the debt brake.
This should be adjusted in three places, as the Advisory Council announced on Tuesday.
“The adjustment to the debt brake we propose increases the flexibility of fiscal policy,” said Council Chairwoman Monika Schnitzer.
“It makes it possible to undertake forward-looking public spending and manage the transition after an emergency without undermining the sustainability of public finances.”
Specifically, the committee proposes the introduction of a transition phase for the years immediately after the application of the debt brake exception clause.
The permissible structural deficit is likely to be above the normal standard limit, but must be steadily reduced.
The second point is that the standard limit for the annual structural deficit should be staggered depending on the debt ratio and increased if ratios are low.
If the debt ratio is below 60 percent of gross domestic product (GDP), the limit for the structural deficit should be one percent of GDP, but if it is between 60 and 90 percent, it should only be 0.5 percent.
In addition, the economic adjustment should be methodically improved in order to make it less susceptible to revision and thus enable a financial policy that is more in line with the economic situation.
Economists fear that necessary investments will not be made
Economic crises can still have significant effects on an economy in the years following an acute emergency, according to the Council of Experts, which advises the federal government.
An immediate consolidation of the national budget in order to comply with the debt brake again in these years could lead to unnecessarily strong negative impulses for an economy that is still weakening.
The exception clause of the debt brake should therefore be supplemented by a transitional regulation.
“A transitional regulation would provide additional fiscal leeway for crisis management and at the same time prevent constant discussions about declaring emergencies,” said economist Ulrike Malmendier.
Many economists criticize that the debt brake prevents necessary investments - for example in infrastructure, digitalization and climate protection.
It is expected to take effect again this year for the first time since 2019.
Finance Minister Christian Lindner (FDP) can still take on up to 39 billion euros in additional debt.
The Bundestag is expected to pass the budget on Friday.
(Reuters, lf)