Turning point for the debt brake

The Bundestag voted by a clear two-thirds majority in favor of an amendment to the Basic Law, paving the way for a far-reaching debt package. In yesterday's special session, a total of 512 members of parliament voted in favor of the amendment and 206 against, with 489 votes in favor required. This will allow for high levels of investment in defense, infrastructure, and climate protection, and in the case of defense and security, the debt brake can be suspended once a certain level is reached.

This decision marks a turning point: it shows that a reform of the previously strict debt brake is possible. According to a recent report by the Hans Böckler Foundation, flexible adjustments are necessary to ensure that the debt brake does not harm Germany's future due to a lack of investment.

The report proposes adding an investment rule to the existing debt rule, according to which public investments would be exempt from the current debt brake. This would mean that necessary investments in areas such as infrastructure, climate protection, or education could be made without the strict limitation on borrowing. This would allow the government to invest in forward-looking projects that are crucial for restructuring the economy and managing the socio-ecological transformation without jeopardizing budgetary stability.

We were also interested in these topics:

• Lowered economic forecast: The OECD has lowered its economic growth forecast for Germany from 0.7% to 0.4%. Global trade barriers and increasing political uncertainty are contributing to the reduction.

• Costs of unemployment: The costs of unemployment in Germany rose significantly in 2023, reaching €67.5 billion – an increase of 14.4%. This development is mainly due to higher unemployment figures and increased basic security benefit rates. A detailed analysis is provided by the IAB Forum.

• Pension system: Marcel Fratzscher, President of the DIW, believes that a retirement age of over 67 is necessary to cope with the rising costs of the pension system and avoid overburdening the younger generation. A longer-term adjustment is needed to ensure the financial stability of the system, reports Der Spiegel.

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