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This short paper highlights the role of the national fiscal rule, the so-called debt brake, for limiting Germany’s general government deficit. It argues that Germany was only able to comply with the European deficit limit, after this rule has been introduced in 2011. However, due to the creation of large special budgets, the debt brake no longer ensures compliance with the European fiscal rules.

Releasing the Brake: Germany’s National Fiscal Rule No Longer Ensures Compliance with European Fiscal Rules