The election campaign is approaching its climax, in the background there are considerations on how to loosen the shackles of the debt rule - not least in the Federal Ministry of Finance, which is headed by the SPD chancellor candidate Olaf Scholz.

The reason is simple: the existing requirement is so restrictive that it will soon force the next government to put the brakes on budget policy.

To change Article 115 in the Basic Law, you need a two-thirds majority in the Bundestag and Bundesrat, which is not in sight.

Manfred Schäfers

Business correspondent in Berlin.

  • Follow I follow

Therefore, all simulation games revolve around the question of how the existing budget law can be stretched.

However, the Ministry of Finance is keeping a low profile.

Lars Feld, chairman of the Economic Advisory Council until the end of February, warns: "I think little of the efforts to soften the debt brake," he told the FAZ. The debt brake has proven itself.

"In addition, the past ten years have shown that it is not causing any restriction on government investment."

Recourse to exceptions?

Because of the pandemic, the black and red federal government wants to suspend the credit limits again in 2022. She plans a new debt of almost 100 billion euros. According to the general assessment, a renewed recourse to the exception rule for "natural disasters or extraordinary emergency situations which are beyond the control of the state and which significantly impair the state's financial position" is prohibited. With the majority of people vaccinated, the hospitals not under excessive strain and the economy doing well, the proposed suspension of the credit ceiling for next year is difficult enough to justify.

There are some starting points for loosening the lid without having to tackle the Basic Law. Naturally, only the principles of budget management are regulated there. So it is determined that a deficit of 0.35 percent of the gross domestic product is permissible in normal times, in the downturn it can be a little more. Therefore, a look towards the cyclical component. In a nutshell, the question is: what is the normal level of capacity utilization in the economy? If all machines were running and all people had to work for this, there would always be underutilization, i.e. scope for more debt. So far, one has orientated oneself to the usual occupancy. The mode of calculation could be changed relatively easily, but whoever does that has problems with justification. The accusation of trickery is obvious.

Another approach is therefore attracting more attention. The establishment of an investment company, which in turn can take out loans to finance projects. Not only the Ministry of Finance should consider the pros and cons, there is also sympathy in the Union. Armin Laschet campaigned for a Germany fund - hardly being chosen as candidate for chancellor. But the CDU election program is silent on this. So that the loans of such an investment company are not assigned to the state under European law, it must operate independently - the MPs can then hardly control what is being spent on what. Risks to taxpayers remain in the dark.

In addition: when investing, everyone thinks of building bridges, motorways and railways.

But that's the least part.

This year the federal government is planning investments of almost 60 billion euros.

Of this, just over 8 billion euros are real investments.

The rest are all kinds of funding.

Zero leeway

A look at the financial plan shows that the scope for realizing the various election promises (abolition of the remaining solos, lower surcharges on the electricity price, cap on social security contributions, increase in defense spending, higher maternal pensions) is zero. The year after next, the deficit is expected to fall to 5.4 billion euros. Subsequently, a net borrowing of around 12 billion euros annually is planned - this corresponds approximately to the upper limit of the possible. To ensure that this succeeds, the government has fully budgeted reserves of almost 50 billion euros.

In the future, it will be aggravating that the loans from the pandemic years will have to be repaid. In 2023 it will start leisurely with 2 billion euros. In 2026, these obligations are expected to rise to 20.5 billion euros per year up to and including 2042. As a result, this means that even if the government should not aim for a black zero, it may have to generate a surplus.

So many considerations focus on the repayment path so that the payments can start later or run longer. The economist Feld has investigated changes to the repayment schedule so that one does not have to overpay too much immediately after returning to the debt rule. In the study, which he will publish shortly with three co-authors in the specialist journal Perspektiven der Wirtschaftspektiven, a lot revolves around the question of how this payment flow can be structured in a cyclically sensitive manner. Feld doesn't believe in simply stretching the deadline for repaying the debt significantly. "The repayment should be feasible within 25 years."