In Germany, the debt brake policy is under intense scrutiny as calls for its reform grow louder. Predominantly pushed by the finance departments of northern states, led by the Greens and SPD, there's a strong demand to adjust this financial framework. Critics argue that the debt brake, although promoting fiscal discipline in prosperous times, restricts necessary investments during crises.
The policy permits the federal government a net borrowing of only 0.35% of GDP, with exceptions for emergencies. Calls for amendment require a two-thirds majority in the Basic Law. Mecklenburg-Vorpommern's Minister Geue and Bremen State Councillor Stuhrberg are at the forefront of these reform efforts. Finance Ministers Heere and Dressel emphasize the need for growth impulses to modernize administration and reduce bureaucracy.
Finance Minister Jörg Kukies acknowledges the principle's value but supports moderate reform for financing essential projects. The need for economic growth and modernization is underscored by the growing deficit concerns in states like Saxony, where Finance Minister Vorjohann advocates for clear financial priorities.
The situation is exacerbated by soaring municipal debts in regions like Saxony-Anhalt, where the Landesrechnungshof reports rising deficits despite record revenues. This financial strain highlights the urgency of strategic spending and efficient resource allocation.
Calls to suspend the debt brake for up to five years aim to facilitate significant investments in defense, infrastructure, and transformation. Failure to act could result in a "horrorscenario" with escalating debts for social and consumptive spending. The pressure mounts as political and economic stakeholders push for a timely resolution to ensure sustainable fiscal policies.
