Debt Check Bundesländer Debt Brake Forces German Federal States to Change Course

Up until the end of 2010 the accumulative debt of the bundesländer has risen to almost 600 billion Euros. That is an increase of 66 percent since 2001. “There is a great need for action in order to avoid multiple breaches of the Basic Law”, says Hubertus Pellengahr, chief executive of the Initiative for a New Social Market Economy. “What we need are transparent and binding timetables that tell us how the bundesländer will reduce their new debt to zero by 2020. That is why every bundesland ought to enshrine the debt brake in its own, federal constitution as well”, says Pellengahr.

“For the majority of the bundesländer, the debt break poses a major challenge. They are facing harsh cutbacks and ought to start making them as soon as possible” says Dr. Rolf Kroker, chief executive of the Institute for the German Economy Cologne and head of its resort for economic and social policy.

The debt check marks Saxony and Bavaria as showpiece-länder. They have the lowest debt levels and hence the smallest need for consolidation. Bremen and Berlin, on the other hand, face major cutbacks.

North Rhine-Westphalia, Rhineland-Palatinate, the Saarland and Schleswig-Holstein also face problems. These bundesländer have debt levels above average and high deficits. Moreover, their medium-dated potential for consolidation is rather small. In the case of the Saarland and Schleswig-Holstein, the stability council of the federal government and the bundesländer has already diagnosed a looming budgetary state of emergency. “The budgetary position in North Rhine-Westphalia and Rhineland-Palatinate is just as precarious. In order to consolidate their budgets, both bundesländer ought to take austerity measures now”, says Kroker. The union of taxpayers also demands that a stop be put to the debts. Its president, Dr. Karl Heinz Däke, makes the case that the debt brake of the Basic Law should be enshrined in the federal constitutions of the bundesländer as well. “The debt brake has constitutional status. This also applies to the bundesländer. Nevertheless, there needs to be a broad consensus in society that Germany tries to find its way out of government debt. That is why we support the creation of a debt brake or even a debt stop for the federal constitutions as well”, says Däke.

The interactive debt check presents the latest figures and facts as well as the relevant key figures of the bundesländer budgets: debt level, new debt, staff expenditures, interest charge, investments and medium-dated potential for consolidation are revealed for each bundesland.