German financial policy is too expansive and not ambitious enough when it comes to reducing new debt.

Without additional structural consolidation measures, there is a risk that the European targets will be exceeded.

This is the verdict of the Stability Council's independent advisory board in a nutshell.

He contradicts the panel of politicians on the important question of whether the federal and state governments meet the European budgetary requirements.

"The core budgets of the federal and state governments are complying with the debt brake, but there are extensive deficits in shadow budgets," writes the Advisory Council in its statement on the Stability Council meeting on Friday.

The regular EU upper limits are currently suspended.

Nevertheless, there are recommendations that should also be observed in times of the exception clause.

Manfred Schäfers

Business correspondent in Berlin.

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Federal Finance Minister Christian Lindner (FDP) said after the meeting that the federal government took note of the report.

He felt confirmed in his goal of consolidating the federal budget even more ambitiously.

"We cannot have an expansive financial policy in the long term," emphasized the FDP politician.

His colleague from Schleswig-Holstein, Monika Heinold (Greens), brought up the idea of ​​opening up debt leeway for the federal states again in order to achieve climate neutrality more quickly.

So far, this has failed them in normal times.

The Stability Council has the task of making sure that the federal, state, local and social security funds do not incur too much debt.

It is intended to prevent budgetary emergencies and to ensure that European requirements are met - that is, excluding economic influences, the deficit does not amount to more than 0.5 percent of gross domestic product.

Members are the finance ministers of the federal and state governments as well as the Federal Minister of Economics.

Controversial issue of electricity and gas price brakes

In its statement, the independent advisory board, chaired by Thiess Büttner from the University of Erlangen-Nuremberg, recalled the European Commission, which complained in autumn that the fiscal orientation was too expansive at a time of high inflation.

The request from Brussels to better focus the aid in the energy crisis on households and companies that are particularly affected is largely ignored - the brakes on electricity and gas prices are implemented as planned.

All in all, the Advisory Board considers the recommendations of the EU Commission to be appropriate.

According to the latest projection by the Stability Council, the German government deficit adjusted for economic factors is expected to be around 3.25 percent of gross domestic product next year and fall to 1.5 percent by 2026.

"This value is three times higher than the binding European requirement," emphasized the Chairman of the Advisory Board.

The statement also states: Although this shows an average structural improvement of at least 0.5 percentage points of GDP, the advisory board judges that the annual standard target for 2026 was not met last year.

The EU Commission also often uses a two-year period as a basis for the control.

But even with that, the rate improves only half as much as it should.

The Advisory Council criticizes the fact that the Stability Council assumes a very high deficit for the coming year and then uses this to measure the improvement.

"The resolution recommended by the Stability Council uses an elevated ski jump, so to speak, to achieve the medium-term goals, which did not have a building permit: Due to the high deficit in the starting year 2023, it is easier to comply with the specifications for the future reduction of the deficit," is his criticism, which was formulated in an exceptionally graphic way.