Debt brake (debt limit)

In general, a cap on new government borrowing. Following a referendum in 2001, Switzerland was the first country in the world to introduce a debt brake into the Federal Constitution (Article 126), which has been observed until now. – The linking of revenues to government expenditures in such a way that the amount of revenues, supplemented by a certain percentage, determines the maximum permissible expenditures; sometimes also called expenditure ceiling (ceiling; Plafond = French maximum limit; expenditure upper limit). – In the case of longer-term planning, “invisible” burdens on the national budget must also be planned for, such as the assumption of guarantees. – In Germany, an amendment to the Basic Law made in June 2009 (Article 143d), according to which – the federal government may limit its new borrowing to a maximum of 0.35 percent of gross domestic product from 2016 and – the states may not take out any new loans at all in normal economic times from 2020. – On March 1, 2012, a binding debt brake was also agreed for all member states from 2013 at a summit meeting of the EU; only the United Kingdom and the Czech Republic refused to accept this agreement. – See spending restraint, public, exit strategy, fiscal referendum, financial market stabilization agency, preliminary budget vote, European, credit freeze, low interest rate policy, stability and growth pact, fiscal framework, sinking fund, constitutional article one. – Cf. Monthly Report of the Deutsche Bundesbank of October 2010, pp. 88 f. (critical views on the debt brake in Germany), Annual Report 2010 of the ECB, pp. 83 ff (costs and benefits of fiscal consolidation; references), Monthly Report of the Deutsche Bundesbank of May 2011, pp. 74 f. (legal situation; quantitative assessments), Monthly Report of the Deutsche Bundesbank of August 2011, p. 79 (listing of revenues and expenditures until 2015 according to the adopted debt brake), Monthly Report of the Deutsche Bundesbank of October 2011, pp. 15 ff. (detailed presentation; many statistics; implementation problems; open questions), Monthly Report of the Deutsche Bundesbank of November 2011, p. 73 (critical comments on the cyclical component), Monthly Report of the Deutsche Bundesbank of February 2012, p. 70 f. (safety margin to the constitutional limit for new debt is essential), Monthly Report of the ECB of February 2013, p. 81 ff. (scope and significance of individual regulations; detailed presentation; many overviews).

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
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