Business method Schnitzer: "It is difficult to convey that pensions are rising so sharply"

Prof. Schnitzer, this year the council was unable to agree on a common position on two issues.

How much does he miss his fifth member Lars Feld?

Svea boy

Editor in business.

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First of all, the new constellation meant for us that we had to distribute a lot of work on four shoulders instead of five.

But there is also something positive about it.

In the days when there were still five of us, there was always a majority, even on contentious issues.

That has changed this year.

That is why some things were discussed in more detail and there was more room for diversity.

The sticking point is above all the issue of debt.

Unlike your fellow councilors, you and Achim Truger are open to a loan-financed investment company.

Why is it needed?

We in the Council agree that the debt ceiling can be adhered to again in 2023, as planned by the government. Nevertheless, the question remains of how to deal with the high expenditure required to cope with the transformation. In order to create long-term leeway for this - mind you within the scope of the debt brake - loan financing is necessary. Investment companies would have the advantage that the tasks are not only clearly defined, but also that the expenditures for them are steadied. Because one reason why investments have not gone well in recent years is that investments were made sporadically, depending on the cash situation. This meant that not enough capacities were available - neither in the construction companies nor in the authorities to plan the projects. It takes continuity.

The Council is also divided on European fiscal rules. What could a reform look like that does not open the door to over-indebtedness?

We are not interested in abolishing the fiscal rules, they are sensible and important. But you also have to be realistic. The 60 percent rule limits national debt to 60 percent of gross domestic product. Italy, for example, currently has a debt ratio of 160 percent. The current 1/20 rule forces Italy to reduce the difference to the 60 percent limit by one twentieth every year. For that Italy would have to generate enormous surpluses - just to pay off the debt. There is not much left for investment, but a country cannot grow without investment. My impression is that the other two councilors fear that once they start to be relaxed, confidence in the fiscal rules will be gone. But we are convinced that credibility suffers even more,when the rules are permanently and generously interpreted to make it appear as though they are being obeyed. It is obvious that the rules in their current form cannot possibly be adhered to.

But doesn't relaxation undermine any discipline to follow the rules?

If a country knows that it has no chance of complying with the rules anyway, it has no motivation to make an effort.

In order for the heavily indebted states to have a realistic possibility of adhering to the rules again, the requirements for the transition should be adapted to their individual situation.

If the goal is realistic, there is again an incentive for countries to make an effort.