Debate about debt brake breaks out after BVG ruling

BERLIN (Dow Jones)–In the wake of the Federal Constitutional Court ruling on the Climate and Transformation Fund (KTF), a debate has broken out about a renewed suspension of the debt brake. The economist Veronika Grimm has warned against further abolishing the debt brake in the Basic Law. “Suspending the debt brake using an emergency rule requires an emergency. That is difficult to argue,” Grimm told the newspapers of the Funke media group. “Climate protection is a long-term transformation task that will last decades. We have to act sustainably in terms of fiscal policy, otherwise we will experience sovereign debt crises in Europe long before the climate is saved.”

After the loss of 60 billion euros from climate and transformation funds, Federal Finance Minister Christian Lindner (FDP) announced cuts in economic development. “In the future, there will be a lack of government funding that was earmarked for the renewal of the economy and infrastructure. We now have to make more effective policies with less money,” said the minister in “Bild am Sonntag”. The government is working on new concepts.

However, the finance minister sees potential for savings and emphasized that the state basically has “no revenue problem”. For a decade, annoying bureaucracy, sometimes inefficient redistribution and planned economy subsidies have been growing. Lindner admitted that the upcoming savings would be painful, but that there was also an opportunity.

IG Metall against debt brake

The chairwoman of the IG Metall union, Christiane Benner, is calling on the federal government to suspend the debt brake. Benner told “Bild am Sonntag”: “The debt brake is a real brake on the future. We urgently need investments, not just in industry, but also in our infrastructure.” If politicians really want Germany to become climate neutral by 2045 and not lose touch with the economy in the process, they must also ensure that there is enough money to implement the goals, demanded the union leader.

The consequences of the Federal Constitutional Court ruling are “a catastrophe” because it affects “investments that are indispensable for our industry and society.” Benner criticized the traffic light package to reduce electricity prices for industry. Germany is “in the midst of tough international competition,” said Benner. Reasonable framework conditions are necessary, otherwise companies will relocate their production abroad.

Contact the author: [email protected]


(END) Dow Jones Newswires

November 19, 2023 05:54 ET (10:54 GMT)