Germany is approaching fiscal conditions similar to those in the United States, according to a recent analysis by the think tank Dezernat Zukunft, as reported by Der Spiegel.
The analysis warns that the “maneuvering room” for discretionary spending could decrease from 25 to three percent within the next decade – equating to just €16 billion, or less than €1 billion per ministry. To maintain operational capacity under such constraints, the government would likely need to repeatedly issue new debt through special funds, a strategy akin to the United States, which regularly faces contentious political debates over its debt ceiling.
Philippa Sigl-Glöckner, founder of the think tank and a former SPD candidate for the Bundestag and co-author Florian Schuster-Johnson, argue that this trajectory is neither democratically nor fiscally sound. They attribute the shrinking fiscal space primarily to rising interest payments and so-called “survival subsidies” including welfare programs like Bürgergeld (citizen’s income).
The think tank recommends that the federal government prioritize utilizing budgetary resources for sustainable growth and improved labor market utilization. Furthermore, they emphasize the necessity of revising the debt brake as currently planned.