📚 Save Big on Books! Enjoy 10% off when you spend £100 and 20% off when you spend £200 (or the equivalent in supported currencies)—discount automatically applied when you add books to your cart before checkout! 🛒

Copyright

Katja Rietzler; Andrew Watt;

Published On

2024-12-11

Page Range

pp. 45–58

Language

  • English

Print Length

14 pages

3. Germany

Additional Investment Needs Require Reform of the Debt Brake

  • Katja Rietzler (author)
  • Andrew Watt (author)
Chapter of: Investing in the Structural Transformation: 2024 European Public Investment Outlook(pp. 45–58)
In recent quarters, German public investment has increased slightly in real terms. However, this development is driven largely by special effects such as the reclassification of public transport companies and increased military spending. Additional investment needs are estimated to be as high as 1.4% of GDP, and cannot be met without a substantial reform of the debt brake. Economists have recently come up with numerous reform proposals, but there is still no political majority for a reform. While European fiscal rules do not require much f iscal tightening in Germany, they do constrain the use of credit to finance the necessary additional public investment. Instead of a big push, the more likely scenario is continued incremental progress, or “muddling through”.

Contributors

Katja Rietzler

(author)
Head of the Unit of Fiscal Policy at the Macroeconomic Policy Institute (IMK) at Hans-Böckler Foundation

Katja Rietzler is Head of the Unit of Fiscal Policy at the Macroeconomic Policy Institute (IMK), part of the Hans-Böckler Foundation. She holds a PhD from the Freie Universität, Berlin. Among other topics, her research focuses on fiscal issues of the municipalities, the German tax-system, public investment needs, and fiscal rules. In addition, she is a member of the IMK’s modelling team. As an expert she regularly participates in parliamentary hearings on issues such as tax legislation, annual budgets, or the debt brake and its implementation.

Andrew Watt

(author)
General Director at European Trade Union Institute

Andrew Watt is General Director, European Trade Union Institute (ETUI), and former Head of the Unit of European Economic Policy at the Macroeconomic Policy Institute (IMK), part of the Hans-Böckler Foundation. He holds a PhD from the University of Hamburg. His main research fields are European economic and employment policy and comparative political economy, with a particular interest in the interaction between wage-setting and macroeconomic policy. Recent work has focused on reform of the economic governance of the euro area, emphasizing the need to coordinate monetary, fiscal, and wage policy in order to achieve balanced growth and favourable employment outcomes. He has served as advisor to numerous European and national institutions, including the European.