3

Germany has in place a "debt brake":

In 2009 it was approved with a two-thirds majority both by the Bundestag and the Bundesrat. This decision will lead to public budgets without structural deficits (Länder) or a very limited deficit (0.35% of the GDP for the federal state)

If I understood correctly this enforces Germany (and many of its Länder who adopted the same decision) to virtually have no budget deficit.

I know about the European Fiscal Compact that defines the 3% general budget deficit for EU countries and I am wondering if any other EU country made a similar decision: to impose by law a lower budget deficit that the one imposed by EU.

Question: Is there any European Union country that had or have a "debt brake" similar to Germany?

5
  • 3
    Note that the 3% rule of the EU has a lot less power behind it than the German one. If a German government wants to borrow above the debt brake, they would have to change the law first. If a EU country breaks the 3% rule, the EU will write an angry letter and discuss whether they should do something beyond that, historically the answer was 'no'.
    – quarague
    Jan 23, 2020 at 13:37
  • @quarague That's note the way the EU rule actually works in practice, see my comments on politics.stackexchange.com/questions/13518/….
    – Relaxed
    Jan 24, 2020 at 11:02
  • That's not exactly what the rule does. Most importantly, it's about the so-called “structural deficit” as no state actually controls its overall deficit. Regarding other European countries, you have to distinguish those that are not trying to achieve zero deficit (economically, it's not as good an idea as it sounds like) and those that claim to do it. Regardless of the stated goal, few would have a rule like the German Schuldenbremse (I don't know any) because it is a very peculiar approach from a governance point of view.
    – Relaxed
    Jan 24, 2020 at 11:09
  • I know that Switzerland is not part of the EU, but it's kind of close geographically and economically and they also have something similar. Jan 27, 2020 at 23:10
  • Also note, that the debt brake rules in Germany only fully come into force from 2020, even though the law was approved in 2009. Jan 27, 2020 at 23:11

1 Answer 1

4

Sweden have something like this (överskottsmål.) It is basically a number of rules for the government, municipalities and regions which enumerates when and how to deal with prognosed deficits.

The current in-force announcement says that the maximum government net lending will not exceed 0.33 % over an economic cycle.

One component is the requirement on the government to apply a ceiling on the total yearly outlay (excluding interest and amortizations of the existing state debt.) The parliament decides each year the amount (ceiling) to be permitted in 3 years, so this year (2019-2020) i think they will decide the amount to followed in year 2023. The intent is to give shareholders (riksdagen and investors) expectations (?) on the financial outcome over a period of five years.

About the financial policy framework and agreement (in English)

The term used in the english version of the framework announcement is expenditure ceiling.

3
  • 1
    Can you please provide a reference for further details? I am mostly interested in the exact figures of the allowed deficit. I found here something about a 0.33% surplus (so a negative deficit value) back in 2016 for Sweden. Thanks.
    – Alexei
    Jan 23, 2020 at 11:43
  • The only reference i have found is in Swedish, and no i'm not really knowledgeable about the english terminology for these things. Jan 24, 2020 at 8:18
  • I added an url to the current declaration Jan 26, 2020 at 17:28

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .