Budget Preparation in Saxony under the Impact of the Corona Pandemic

In the next two years, Saxony's state budget can only be balanced by drawing on the Corona Contingency Fund, which is fed by loans of a maximum of 6 billion euros. From 2023 onwards, this will no longer be possible, so there is a threat of a substantial and prospectively rising deficit which under current constitutional conditions can only be covered by spending cuts. In order to avoid the threatening negative effects on growth, the ifo Institute proposes a reformulation of the debt brake anchored in the Saxon constitution in the case of cyclically induced tax revenue shortfalls.