Den tyska grundlagen och skuldbromsen
Germany’s government’s attempt to repurpose €60 billion /600 miljarder SEK/ in unused pandemic funds for climate spending was ruled unconstitutional in November.
Germany’s predicament stems from a decision in 2009 to amend its Basic Law to include a debt brake — a stringent stipulation that net government borrowing shouldn’t exceed 0.35% of gross domestic product.
much criticized outside of Germany
And the debt brake isn’t totally inflexible: It can be disregarded during emergencies such as the pandemic and the energy crisis — it has been suspended for the last four years — and provides leeway for more borrowing during an economic downturn (which must be counterbalanced during the recovery).
However, it has at least one fundamental flaw: The borrowing limit fails to distinguish between current consumption expenditures (such as welfare payments) and long-term investment.
Germany should introduce a so-called golden rule, whereby investment is excluded from balanced budget obligations.
Even the Bundesbank — not exactly a bastion of fiscal recklessness — is open to the idea of a limited golden rule.
Regrettably, Germany is unlikely to adopt such a measure in the short-term as changing the constitution requires a two-thirds parliamentary majority.
Chris Bryan Bloomberg 8 januari 2024
Den tyska budgeten för 2024 kommer inte att hinna klubbas före årsskiftet.
https://englundmacro.blogspot.com/2023/12/den-tyska-budgeten-for-2024-kommer-inte.html
The EU has averted disaster with a reform of the Stability and Growth Pact, but the new regime still contains some of the old one’s flaws
https://englundmacro.blogspot.com/2024/01/the-eu-has-averted-disaster-with-reform.html
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