Economists and centers of reflection evoke various instruments to identify budgetary room for maneuver. It is a reflection of a profound evolution of the debate.
by
These are the small changes that, in Germany – country deeply attached to stability -, provide information on large ruptures. Wednesday, November 10, the Council of the Sages, the Committee of Economists Advice from the Government, delivered one of these signs that do not deceive. For the first time, their annual report reflected two different approaches in a balanced way to influence the fiscal policy of the next cabinet.
One defends the strict discipline of public accounts, in the so-called “Ordoliberal” tradition. The other suggests original solutions to finance the enormous investments in digital and the decarbonation that the future coalition wants to achieve. “This will not only work with conventional methods,” says Monika Schnitzer, one of the board member economists, partisan of the second approach.
The conclusions of this annual report traditionally dominated by orthodox economists had also been open. This revolution in the Council of Sages operates an unexpected opportunity. In 2020, the Coalition Government of Angela Merkel had failed to agree on the renewal of the mandate of the Chairman of the Board, the very conservative Lars Feld. The latter therefore left the proceeding, without successor. Instead of five members, the Council has only four, which required the balance of approaches. It is also a reflection of the deep renewal of the debate on macroeconomic issues in the country.
The training coalition – composed of the Social Democrats, Greens (budgetary progressives) and the Liberals of the FDP (more Orthodox) – is also exposed to this controversy. For the future government, the dilemma is as follows: how to identify sufficient budgetary room for maneuver, while keeping taxes increase and touching the constitutional mechanism of the “debt brake”, which limits to 0.35%. Gross domestic product The authorized structural deficit? A challenge, while the coffers of the state have already funded the effort to support the economy because of the health crisis. Around the parties of the future coalition, economists compete with suggestions to allow the state to borrow more … without this appearing to the budget.
Get a liquidity reserve to spend more late
A very discussed first strategy would be to use public enterprises, which benefit from the same advantageous interest rate as Germany, to borrow massively. The Deutsche Bahn, a railway company belonging to 100% to the federal state, could thus obtain precious liquidity to push the decarbonation of transport and improve the infrastructures. The KFW investment bank also owned by the state, is also a coveted instrument. It could evolve in the public investment fund to finance the energy transition. However, in the eyes of the Orthodox, these instruments present the failure to potentially escape the control of parliamentarians, unlike a classical finance law.
You still have 38.09% of this article to read. The rest is reserved for subscribers.