Behind the debt brake, Germany's finance minister Wolfgang Schauble and Chancellor Angela Merkel (photo:dpa)

Will the German debt brake work and can it be a model for Europe?

The fiscal compact has committed 25 out of 27 EU member states to follow the German model and implement a ‘debt-brake’ in their countries. In the third of his four-part series, GIS expert Professor Dr Michael Wohlgemuth explains the key aspects of the German debt brake, its implementation and potential loopholes. And even if this constitutional amendment might work in Germany, there are doubts whether borrowing limits will be equally strict and effective in many other EU countries.

GERMANY’S new balanced budget rule, commonly called the debt brake or Schuldenbremse, was the outcome of an all-party and multi-level (federal, state, municipal) commission to modernise ‘financial relations...

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Dr. Michael Wohlgemuth
The innovative part of the debt brake is that it implements a rules-based automatic feedback of cyclical deficits and surpluses
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