Following the temporary suspension of the debt brake between 2020 and 2022, it has been back in effect since this year and will remain in place through 2024. However, the resulting budget consolidation must not come at the expense of the German economy’s cost competitiveness. Companies urgently need investment incentives, for example, for climate protection. In addition, structural measures are needed to simplify procedures and reduce bureaucracy. The goal for Germany as a business location must be a sustainable fiscal policy that enables sound public finances while adhering to the debt brake, in order to overcome current challenges and times of crisis.

Need for Consolidation in the Federal Budget

Compliance with the debt brake necessitates consolidation of the federal budget, particularly in light of a funding gap of approximately 14.4 billion euros projected by the Federal Ministry for the period from 2025 to 2027. To close this gap, annual budgetary measures totaling approximately five billion euros will be required during this period. Additionally, it should be noted that certain funds, such as the one for the Bundeswehr, will be depleted starting in 2028, and repayments of special-purpose debt are due. The consolidation measures will have an impact on the economy, for example, through the possible elimination of energy tax relief amounting to approximately 1.7 billion euros.

Goal: Reduce the public debt-to-GDP ratio and comply with the debt brake

It is appropriate and prudent that, in order to consolidate fiscal policy, the federal budget will once again comply with the debt brake enshrined in the Basic Law in 2023.

The federal government’s annual debt margin of 0.35 percent of GDP (16.6 billion euros in 2023) should be used to overcome the crisis and make important investments.

For the BDI, the debt brake—unlike achieving a so-called “balanced budget”—is non-negotiable. However, policymakers must provide strong impetus for public and private investment within this framework. Sound public finances are not only important for stabilizing private investment and ensuring strong economic growth in Germany. They are also a matter of intergenerational justice: sound fiscal and budgetary policies must always keep future generations in mind. Our goal is to expand the scope for action available to our children and grandchildren, rather than burdening them with debt and the resulting financial strain.

In the medium term, this also means reducing the government debt-to-GDP ratio. The BDI is committed to adhering to the debt limits set forth in the Maastricht Treaty, which ensure that public budgets remain sustainable and capable of effective action.