The black zero in Germany is wobbling. Expenditure wishes and revenue expectations are diverging more and more. The burdens are coming from both sides. As the economy weakens, tax revenues will decline in the long term, while spending expectations will continue to rise. Even last year there was a comfortable surplus: In the overall public budget, revenues in 2018 were almost 54 billion euros higher than expenditure. And this despite the fact that last year government spending grew more strongly than tax revenues.
I am actually a great friend of a balanced budget for states, especially against the background of intergenerational justice. This, however, is currently being made absurd. The Federal Government can currently go into debt with negative interest rates. Increasing indebtedness does not, therefore, lead to a burden on future generations. Assuming a positive return on investment in growth and employment, today’s rising debt would also have a positive overall return for future generations.
Germany is in fierce competition with other countries for investment. The competition between locations is becoming increasingly dynamic. A good infrastructure is a basic prerequisite for an attractive location. However, the shortcomings in the German infrastructure are becoming more and more obvious and are also the subject of discussion on many occasions. The need for action on the part of the Federal Government is increasing accordingly. Added to this are the necessary investments in a sustainable energy policy orientation. The need for investment is therefore actually great.
In times of negative interest rates, it is time to critically question the doctrine of the black zero. The Federal Government should make use of the current interest rate landscape and adapt its debt policy to the new circumstances. The money should be invested purposefully in promoting the location and sustainability. The clientele policy so popular with the parties, on the other hand, should not take place. The latter is probably the greatest challenge.