THE STATE

A Debt Brake for the 21st Century

In a newly published piece on Makronom, Philippa Sigl-Glöckner lays out her formula for a reform of the German debt brake.

BY

THORE BECKMANN

PUBLISHED

18. DECEMBER 2020

READING TIME

1 MIN.

Philippa Sigl-Glöckner, founder and director of the Dezernat Zukunft, argues in a new Makronom article for a new discussion on German fiscal rules. The corset of the debt brake is too tight and the conceptual design is no longer up to date.

Instead, she argues that the federal government’s fiscal policy should be oriented towards true full employment. Accordingly, unemployment must be understood as the under-utilisation of a state’s potential. In the face of huge tasks in climate and digitalisation policy, this cannot be understood as “sustainable” budgetary policy.

Sigl-Glöckner also calls for an expansion of budgetary elasticity and brings an early warning system for excessive interest costs into play. However, all this would only be possible if the analytical competence of the Bundestag were increased. The capacities here are far too small compared to the huge ministries.

Read the entire article on Makronom here.

 

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ABOUT THE STATE

KNOWLEDGE BASE

For decades, there was a consensus that reducing the role of the state and cutting public debt would generate wealth. This contributed to a chronic underinvestment in education and public infrastructure. New research focuses on establishing when and how governments need to intervene to better contribute to long-term prosperity and to stabilize rather than aggravate economic fluctuations.

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