As of: February 2, 2024, 10:49 a.m
By: Amy Walker
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The 2024 federal budget should finally be decided on Friday.
Economists and trade unions are calling for a reform of the debt brake one last time.
Berlin - Shortly before the planned decision on the 2024 federal budget, the chairwoman of the so-called “Economists”, Monika Schnitzer, clearly spoke out in favor of reforming the debt brake so that necessary investments could be made in the transformation of the economy.
Schnitzer told the
Neue Osnabrücker Zeitung (NOZ)
: “I can only recommend that the government agree on this in the coalition and tackle reform together with the opposition.
The scope is unnecessarily small, which slows down important future investments.”
Schnitzer warned that this would also affect the next government.
“We cannot forego necessary investments because of the debt brake.”
Schnitzer: Reform of the debt brake, not abolition
In the past few weeks, the economy has expressed criticism several times about the traffic light coalition's plans.
At the beginning of the year, she renewed her demand to abolish the mother's pension in order to free up money for important investments.
“The mother’s pension, which was introduced in 2014 for mothers with children born before 1992, costs us tens of billions every year.
It has no steering function,” said Schnitzer in an interview with
Focus
.
“It was purely an election gift,” she continues.
Schnitzer now made it clear in the
NOZ
that she is not interested in abolishing the regulation that limits the government's borrowing to a minimum during normal times.
“We propose making the debt brake more flexible, not abolishing it.
If we now maintain the debt brake in the rigid form established by the Federal Constitutional Court, our debt ratio would fall to 40 percent in the next few decades, even if we repeatedly had emergencies.
However, this is not necessary in terms of debt sustainability and can even be harmful because it slows down state investments in the future." The state is "unnecessarily restricting its ability to act".
Monika Schnitzer is the chairwoman of the council of economists.
© Hannes P Albert/dpa
The Advisory Council for the Assessment of Overall Economic Development presented the reform proposals this week.
During the budget debate in the Bundestag, the Union and FDP rejected the plans
Schnitzer: Subsidies that are harmful to the climate must be abolished
In addition, Monika Schnitzer sees too few efforts in the 2024 federal budget to reduce climate-damaging subsidies.
“People didn’t dare to fundamentally approach climate-damaging subsidies.
Then it would not only have affected the farmers who now feel that they have been treated unfairly, but the burden could have been distributed more broadly.” Politicians must “show more clearly what happens if the changes for climate protection are not decided”.
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British newspaper makes it clear: Anyone who looks at Germany sees an “accident in slow motion”.
“If you make it clear that without the expansion of renewables, some industries will no longer exist and many jobs will depend on them, you can create understanding.
It is a mistake to believe that one can maintain today's prosperity without giving up anything and allowing changes,” said the economist in the
NOZ
.
Reform of the debt brake is called for across the board
Schnitzer is one of a number of business representatives who are increasingly committed to reforming the debt brake so that important investments are not left behind.
Also this week, conservationists and industry representatives clearly positioned themselves in a joint press release: “Important projects had to be cut or put on hold, investments in transformation are being played off against social equality,” said the alliance.
“This further increases the uncertainty among companies and households and urgent investments in climate neutrality – especially in energy-intensive industries – are not being made.
The bottom line is that Germany’s competitiveness and good jobs, the achievement of climate protection goals and social cohesion are all being put at risk.”
The alliance calls for a factual exchange from both the traffic light government and the opposition in order to work on solutions and examine options such as “a reform of the debt brake, a special fund for climate protection and strengthening the revenue side without prejudice”.
IMF chief economist advises Germany to abolish the debt brake
And internationally, the stubbornness with which Germany insists on the debt brake is increasingly met with shaking heads.
The International Monetary Fund (IMF) has called on Germany to ease the debt brake in order to stimulate economic growth.
“Germany is paying the price for its very tough debt brake,” said IMF chief economist Pierre-Olivier Gourinchas in an interview with Handelsblatt
and
three other European newspapers.
The Federal Republic is in a different situation than some of its European partners.
“The German debt level is completely under control,” said Gourinchas.
At the same time, the structural spending needs are increasing, for example in climate protection, defense policy or energy independence, said the economist.
“The best solution would be to relax this constitutional regulation,” he recommended, with a view to the debt brake anchored in the Basic Law.