21th Statement of the Independent Advisory Board to the Stability Council

The Independent Advisory Board to the Stability Council (Unabhängiger Beirat des Stabilitätsrats)External link, of which Silke Übelmesser is a member,  published a Statement about the structural government budget deficit.

The main points of the statement are briefly outlined below.

• The Independent Advisory Council agrees with the Stability Council to the extent that, based on the projection presented, there is no acute need for action with regard to compliance with European rules.
• However, it sees a considerable need for budgetary policy action in order to actually achieve the projected deficits. In particular, the federal government must comply with the debt brake rules and, in addition to the Federal Defense Fund and the Climate and Transformation Fund, must not run any major deficits in special funds in the current year. However, the spending requests of various departments currently appear to significantly exceed the framework used in the projection from the last financial plan.
• It is also unclear how the NATO commitments and the climate policy planned to date are to be financed. This also applies to the repayment of EU debt to be made from 2028 and any tax cuts (such as the usually compensated cold progression).
• In this context, the Independent Advisory Council considers the approach of assuming that budget rules such as the debt brake will be adhered to to be unsuitable in the course of a budget monitoring projection for methodological reasons, especially as there are no resolutions for the federal budget that take current developments into account and are compatible with compliance with the upper limit for net borrowing. By design, such a projection cannot indicate potential need for action.
• In the view of the Advisory Board, it would be important to inform the public (and the Advisory Council) in a much more transparent manner about the finances of the federal government and the federal states in particular.

See hereExternal link for the statement (in German).