IMFS Working Paper regarding the debt brake in North Rhine-Westphalia

The debt brake in the federal states of Germany is not to be used as a pretext in order to shift borrowing from the Länder to local authorities or to diminish the current financial basis excessively. This is the assessment of Professor Dr. Dr. h.c. Helmut Siekmann in his statement regarding the establishment of the debt brake in the state constitution of North Rhine-Westphalia.

Currently, the state parliament of North Rhine-Westphalia is examining whether to include the debt brake in the state constitution. As from next year, according to the Grundgesetz the Federal Government is not allowed to assume new debt. As of 2020, also the Laender are obliged to submit a balanced budget without facing new debt. In any case, the debt brake applies to the Länder. However, by including the debt brake into the state constitution many detailed issues could be clarified. Half of the federal states, among them Bavaria, Hesse or Saxony, have already taken this step. In his statement at the state parliament of North Rhine-Westphalia, IMFS Professor Siekmann pointed out the loopholes in the legal framework as well as possible consequences.

IMFS Working Paper No. 98
Helmut Siekmann
"Stellungnahme für die öffentliche Anhörung der Verfassungskommission des Landtags Nordrhein-Westfalen zur Schuldenbremse"
(PDF, 251 KB)