Experts More Critical of Bureaucracy than of the Debt Brake // Special Question in the ZEW Financial Market Survey from February 2024

Special Question in the ZEW Financial Market Survey from February 2024

Compared to the last survey in December 2019, support for the debt brake has barely changed despite costly crises.

Despite the current strained budget situation, financial market experts surveyed by ZEW Mannheim do not consider the constitutional debt brake to be the biggest obstacle to investment in Germany. Instead, they attribute the lack of public investment to cumbersome bureaucratic processes and high social and personnel costs. This is the result of the special question included in the ZEW Financial Markets Survey of February 2024, in which 173 financial market experts participated.

"While some question the legitimacy of the debt brake in public discourse, experts widely agree that it serves as a crucial financial policy anchor. Nearly 95 per cent of respondents are in favour of maintaining the debt brake either in its current or in a revised form complementing it with an 'investment rule'. Conversely, only a small and shrinking minority supports the abolition of the debt brake," comments Professor Friedrich Heinemann, head of ZEW's "Corporate Taxation and Public Finance" Research Unit. "The experts strongly criticise bureaucratic inefficiency, lengthy approval processes and the volume of non-investment expenditure. There is clearly much more need for reform in these areas than with the debt brake."