Economist Veronika Grimm does not expect a relaxation of the debt brake in the new legislative period. “It is questionable whether a reform of the debt brake can succeed” the Nuremberg economics professor told the Funke Media Group newspapers (Tuesday editions).
“Supporters of such a reform have already said in the election campaign that they will not accept cuts in social spending. And that is not the Union’s goal” Grimm added, referring to the German federal government. Furthermore, the parties that oppose an increase in defense spending would have a blocking minority in the Bundestag.
Considerations of a reform of the debt brake would only be relevant “if the European Union were to suspend the EU’s fiscal rules again” Grimm said. “If not, Germany will not have any more room for maneuver in the foreseeable future.”
The economist advocated for lower corporate taxes and a higher value-added tax. “To dynamize growth, corporate taxes must be significantly reduced, as must income taxes and labor side payments” Grimm said. “If the growth impulse triggered by this does not suffice, one could consider increases in the value-added tax or property taxes. In particular, the numerous exemptions in the value-added tax could be taken into account.”
The next federal government must succeed in “consequently reshuffling the budget to create room for defense spending in the core budget” Grimm added. This would mean structural reforms, enabling savings in the citizen’s allowance, pension, housing and climate protection policies, without leaving the needy behind or ignoring climate protection goals.