To meet its climate obligations and upgrade its digital infrastructure, Germany needs to rustle up perhaps €50bn a year in public investment. But a “debt brake” limits annual borrowing
Several are doing the rounds. The first is to establish off-budget public companies that can tap markets for funds devoted to specific aims: insulating buildings, say, or charging stations for electric cars. Deutsche Bahn, Germany’s rail giant, operates this way. A related but distinct proposal is to beef up the, the state development bank, to enable it to leverage private funds for green investment.
Perhaps the cleverest wheeze comes from Dezernat Zukunft, a Berlin-based think-tank. Noting that the debt brake relies on estimates of the mysterious “output gap”—or the difference betweentoday and a measure of the economy’s potential—the group suggests tweaking some of the inputs to that calculation. Assuming more slack in the labour market than the finance ministry does, for example, would raise the spending limit. Conservatives dismiss the idea as “Pippi Longstocking economics”.
More conventional sources may offer fiscal crumbs. A new global corporate-tax deal could raise a few billions, as could the legalisation and taxation of cannabis, which is likely under the next government.climate funds might offer a bit more. The odd subsidy might be cut. And the government anyway has a tendency to underestimate projected tax revenues; 2020 brought in €11.4bn more than expected . These will not flood the coffers, but every little helps.
Each of these proposals, to varying degrees, may make it into the coalition agreement promised by the end of November. The absurdity of some of Germany’s finest economic minds concocting complex schemes to escape the country’s self-imposed limitations is not lost on all of them. “It’s ridiculous that so much time is spent trying to find a way around rules we have set ourselves,” says Philippa Sigl-Glöckner of Dezernat Zukunft. Clicking on “one weird trick” ads is rarely wise.
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