Correction of Growth Forecasts: Is a Balanced Budget Still Possible?

Growth forecasts for 2015 have been downwardly revised not only by the German federal government, but also by economics research institutes and the German Council of Economic Experts. In view of the increasingly difficult economic environment, is it still possible for the government to balance the budget? Ludger Schuknecht and Hendrik Ritter, German Federal Ministry of Finance, see a balanced budget as: “feasible, necessary and right”. For the first time in over 45 years Germany has a realistic perspective of a balanced federal budget. It is becoming clear that stable economic development and solid public finances go hand in hand; and that growth-friendly budgetary consolidation pays off. Breaking even is not an end in itself, but makes economic sense and is part of a strategy that also prioritises investment. With this strategy, Germany is giving investors, companies and employees confidence. It is the more demanding, but sustainable path to greater growth. Joachim Wieland, University of Administrative Science Speyer, sees signs of economic weakness that will continue into next year. In his view, the relevant federal ministries should take the measures that are required to ensure the accelerated settling of investment orders. Investments should be financed via loans. For Nobert Walter-Borjans, Finance Minister of North Rhine Westphalia, a balanced budget and future investments are part of our responsibility to future generations. It is natural that a country should not live beyond its means, and it is good that binding rules are established for this in the constitution. Exceptional rules for extraordinarily difficult conditions are nevertheless important.