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Round Table in Düsseldorf

“The welfare state needs a thorough review.”

Prof. Lars Feld, Director of the Walter Eucken Institute and economic advisor to the Federal Minister of Finance at the zeb.Financial Market Roundtable

zeb.Round Table with Prof. Lars Feld in Düsseldorf

At the Industrie Club Düsseldorf, Prof. Lars Feld, Director of the Walter Eucken Institute and economic advisor to the Federal Minister of Finance, discussed the topic “The world in transformation – challenges for economic and financial policy” with board members of banks and insurance companies. In his remarks, the economics professor from Freiburg warned very strongly against softening and revising the German debt brake. According to Prof. Feld, there is no causal link between the debt brake and public investment. In his view, loosening the debt brake to increase public investment is therefore not appropriate. He pointed out that since its introduction, the debt brake had made a major contribution to financial stability. It had led to a lower federal debt ratio and thus also to lower interest costs for the general public. Without the debt brake, the federal government’s debt level would be around 20 percentage points higher, he argued. “This would currently be around 339 billion euros,” Prof. Feld specified. “We will have to think in more detail about how to structure the budget in future within the framework of the debt brake. The welfare state needs a thorough review. It is vital to set priorities, review old projects and question whether they can be continued as before.” According to Prof. Feld, not only the budget of the Federal Ministry of Labor and Social Affairs, but also family policy measures have expanded considerably. “Financial stability can only be achieved through long-term thinking,” Prof. Feld stated. In the very lively discussion, which was chaired by zeb Founding Partner Dr. Andreas Rinker, Prof. Feld pointed out the consequences of the current financial debate: “Abolishing the debt brake would put a strain on Germany’s credit rating and thus obliterate the additional leeway provided by the resulting higher debt – nothing would be gained.”