The director of the employer-related German Economic Institute (IW), Michael Hüther, has spoken out against an end to the debt brake. Instead, on Wednesday on Deutschlandfunk, he proposed a national investment and transformation fund that would have to be anchored in the Basic Law. After the Federal Constitutional Court’s ruling, the traffic light government is confronted with national debt law, said Hüther. “You tinker around it. Then you might talk again about declaring an emergency this year or next year.” But these are not sustainable solutions.
With a historic ruling, the Federal Constitutional Court overturned the traffic light government’s budget planning, as a result of which it now has to plug billions in holes. The cause of the problem is not that Germany is no longer getting any money on the world capital markets or that it is doing worse. The debt ratio is 64 percent of economic output. “But this one-sided focus on debt and not on gross domestic product naturally leads to the government itself having an aggravating effect on overall economic development,” said Hüther. That doesn’t make things any better. The IW economist continued that he was not in favor of lifting the debt brake. “But we can find clever solutions” – for example by setting up a society-wide fund for investments in infrastructure or transformation.
Such a fund includes all investments for which planning and process acceleration is feasible, but subsidies do not. Hüther pointed out that the Bundeswehr special fund had not failed. “And there lies the solution; you have to build it into the Basic Law,” he said, referring to the fund. This must be considered jointly by the federal and state governments. “Because the shortages and problems that the current government has, every future government will also have, and the federal states also have them.” The debt brake would then remain in the remaining budget.