Ifo Institute skeptical about debt brake plans

The Ifo Institute is skeptical as to whether the debt brake can be relaxed in all federal states. Only in Berlin, North Rhine-Westphalia, Thuringia and Saarland could the debt brake be relaxed at state level by law with simple majorities in the parliaments, the Ifo Institute announced. In the remaining federal states, constitutional amendments with two-thirds majorities would be necessary. "It is by no means certain that majorities will be achieved in the federal states for a relaxation of the debt brake," said Joachim Ragnitz from the Ifo branch in Dresden.

A constitutional amendment majority is only available to the governing parties in Schleswig-Holstein, according to the information. Everywhere else, the government would have to reach an agreement with the opposition parties. In Brandenburg, the agreement of at least one AfD MP would even be required.

"In view of these constellations, the debt brake for the federal states will not be lifted so quickly. In many places, constitution-amending majorities will probably be achieved after the next state elections at best," said Ragnitz.

In their exploratory talks for a coalition at federal level, the CDU, CSU and SPD agreed to relax the debt brake for higher defense spending and to create a debt-financed special fund of 500 billion euros for infrastructure. They also agreed to relax the debt rules for the federal states. However, the plans still have to be approved by the Bundestag and then also by the Bundesrat.