Trade unions aim to bypass the debt limit.

Financial commitments for the acquisition of economic assets. - Trade unions aim to bypass the debt limit.

The congestion in public investment has prompted the German Trade Union Confederation (DGB) to suggest a strategy for considerable government spending, despite the financial constraints caused by the debt brake. DGB chairman for Hessen-Thuringia, Michael Rudolph, voiced out this idea on Wednesday in Erfurt. "We cannot accrue enough savings in the public budget to fund all essential investments, such as for schools or hospitals," asserted Rudolph. "We cannot generate the necessary investment capital from savings." Instead, these investments should be financed through loans. The projected investment cost for Thuringia over the next decade amounts to roughly 16 billion euros, according to the DGB.

One possible approach is to utilize existing or newly established public investment companies of the state to incur loans. The debt break restricts the borrowing capacities of public budgets, not the borrowing capacities of these semi-state companies.

The proposed notion is to have state institutions like the Thuringian State Development Company or a newfound State Housing Company borrow substantial amounts from banks. Then, this borrowed money will be employed for endeavors such as school construction, hospital expansion, road and rail upgrades, or wind turbine installations. This would also stimulate economic growth in Thuringia, asserted Liv Dizinger, the head of structural policy at the DGB Hessen-Thuringia. These loans would also safeguard industrial locations and jobs within the state.

According to the cost estimates (from the Institute for Macroeconomics and Business Cycle Research of the Hans-Böckler Foundation and the Institute of the German Economy for Thuringia), the investments needed are higher than the state's annual budget, approximately 13 billion euros. The DGB Hessen-Thuringia's economic policy department head, Julia Langhammer, refers to the loans taken out by state companies as a short-term solution till the current form of the debt break is adjusted.

The German economy needs significant investments in infrastructure as well. The Federation of German Industries recommends creating special funds on a federal level that will be financed through federal bonds to cover specific expenditures.

Read also:

1. Despite the debt brake limiting Germany's borrowing capacities, DGB Hessen-Thuringia's chairman for Erfurt and Thuringia suggests using public investment companies to acquire loans for essential investments, such as hospitals and schools.
2. In response to the high investment costs in Thuringia, estimated to be around 16 billion euros over the next decade, the DGB proposes that state institutions like the State Development Company borrow from banks for projects like hospital expansion and wind turbine installations.
3. The DGB's Liv Dizinger argues that employing borrowed funds for infrastructure development in Thuringia would boost economic growth and protect industrial locations and jobs within the state.
4. Julia Langhammer, the head of the DGB Hessen-Thuringia's economic policy department, views these loans as a temporary solution until the debt brake is adjusted to allow for higher public investments.
5. In agreement with the need for substantial infrastructure investments, the Federation of German Industries suggests establishing special funds financed by federal bonds for covering specific expenditures at a federal level.

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