According to the Organization for Economic Cooperation and Development (OECD), the budget crisis in Germany threatens to put a strain on the European economy. “If there is less investment and spending in Germany in the next few years because there is less money available, then this will inevitably have an impact on the EU economy,” said the head of the OECD’s Germany desk, Robert Grundke.
Europe’s largest economy will then import fewer intermediate goods and fewer final goods and services from the EU. “In addition, the uncertainty about future fiscal policy is already affecting companies’ investment activity and household consumption behavior in Germany,” said Grundke.
With reference to the debt brake anchored in the Basic Law, the Federal Constitutional Court decided that the 60 billion euros originally approved as a Corona loan in the 2021 budget may not be subsequently reallocated for investments in climate protection and the modernization of the economy.
The OECD is in favor of reforming the debt brake. “The current budget crisis can also be a great opportunity to tackle structural reforms that have been waiting to be addressed for a long time,” said Grundke. Germany is facing major challenges, from the aging of society to digitalization and the green transformation.