ifo Media Center
The ifo Institute invites you to participate in the discussion of interesting economic topics via the Internet. In our ifo Media Center a whole series of remarkable events are available and can be viewed in full length. We also record selected speeches and presentations given by employees or at events and make them available in our Media Center.
ifo Viewpoint 223: Abolishing the Debt Brake Is Not Worth It
The debt brake enshrined in Article 115 of Germany’s constitution has been the subject of controversial debate since its introduction in 2009. Critics argue that in the event of major economic slumps, the maximum permissible deficit for the federal budget of 0.35 percent of gross domestic product (GDP) is too small, even when adjusted for cyclical effects. The debt brake also leads to an excessive reduction in government debt and creates incentives to neglect public investment. Moreover, interest rates are so low that significantly more government debt can be afforded.
