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Debt Brake

Debt Brake

The so-called “debt brake” is a constitutional amendment requiring the Federal Government and the 16 German states or Länder to balance their budgets. From 2020, state governments will not be allowed to take out further loans. Since 2016, the Federal Government has been allowed to borrow a maximum of 0.35 percent of gross domestic product under normal economic conditions.

No further tampering
  • Stability and Growth Pact ·
  • IW News ·
  • 13 September 2016

No further tampering

Jean Claude Juncker might buckle again. Tomorrow, the President of the EU Commission will hold his annual State-of-the-Union speech. He could once again make room for more flexibility of the EU’s fiscal rules – and thereby meet ever louder demands of Southern European countries. However, such a move would further damage the EU’s image in other parts of the Union. The Commission should not yield.

EU must take gloves off
  • Financial Sanctions ·
  • IW News ·
  • 11 July 2016

EU must take gloves off

For the first time in the history of the Stability and Growth Pact, the EU could impose sanctions for excessive government deficits. Targeted by sanctions would be Spain and Portugal. And rightly so, because compared to France and Italy, the budget deficits of the Iberians are significantly more severe. This does not allow tinkering with the fiscal rules anymore.

Concept with Shortcomings
  • The new European Fiscal Board ·
  • IW News ·
  • 22 October 2015

Concept with Shortcomings

The European Commission has presented plans to solidify the European Monetary Union. As one of the central elements, an advisory European Fiscal Board will be established in November 2015. However, the concept suffers from serious shortcomings.

Orderly sovereign debt restructuring procedures for the euro area
  • Berthold Busch / Jürgen Matthes ·
  • IW-Policy Paper No. 23 ·
  • 30 July 2015

Orderly sovereign debt restructuring procedures for the euro area

The case of Greece has reveiled an institutional gap remains in the institutional framework of EMU: an orderly insolvency mechanism for sovereign states. After weighing the pros and cons of such a...

three gained years
  • Greece ·
  • IW News ·
  • 13 July 2015

Five lost months: three gained years

The difficult talks on a further bail-out package for Greece seem to have come to an agreement: the impending Grexit finally became an agreekment. At least for the three coming years, Greece will stay in the Eurozone.

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Tobias Hentze

Dr. Tobias Hentze

Senior Economist for Financial Policy and Tax Policy

Tel+49 221 4981-748

Mailhentze@iwkoeln.de

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