A federal bail-out meant most municipalities avoided disaster last year. But by 2023 many will face a fiscal crunch, says Jens Südekum, economics professor at the University of Düsseldorf. The commercial taxes that are their main independent source of income are volatile, and covid-19 creates new demands. National laws limit their ability to cut current spending, one of Mr Tsalastras’s bugbears. That puts capital investment in the firing line.
Bureaucracy and nimbyism play a role. Companies struggle with a patchwork of planning and building rules. Opponents delay public-infrastructure projects with endless litigation. The number of projects blocked by citizens’ initiatives has doubled since 2000. This is problematic for roads, railways and bridges. But it is a “real hurdle” to climate transformation, says Mr Scheller.
Other states are even more restrictive. Rules to protect endangered species vary from state to state. A few years ago litigation, regulation and complex tendering slowed the construction of wind farms to a crawl, although 2021 has offered flickering hints at a revival. The mismatch between the federal government’s ambitions and the reality of local regulation, says Mr Hrach, will make it impossible for Germany to reach its commitments under the Paris climate agreement.
There is a near-consensus that the next government must do more to satisfy vast public-investment needs. The debate is over how. For some, tackling the country’s austerity bias is a priority. The debt brake now in the constitution limits opportunities for deficit spending. Critics of German tightfistedness are legion. The European Central Bank has long urged countries with “fiscal space” to exploit it. But all such suggestions have tended to run into an austere wall of fiscal orthodoxy.
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