Download Prof. Dr. Christoph Gröpl

Prof. Dr. Christoph Gröpl
Chair of Constitutional and Administrative Law
Faculty of Law and Business
Saarland University, Germany
The Greek debt crisis;
the new German ‘debt brake’
Greek debt crisis
Statistics on public debt
China
public debt
(ttl. amnt.): € 1,311 bn
population:
1,339 m
public debt
per capita:
€ 981
public debt
per GDP:
22 %
Germany
Greece
€ 2,000 bn
€ 340 bn
82 m
11 m
€ 24,000
83 %
€ 31,000
143 %
(gross domestic product)
Prof. Dr. Christoph Gröpl · Debt crisis, debt brake
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Greek debt crisis
The ‘Greek financial disaster’
2001: introduction of the Euro (€)
2010: 1st packet of assistance for Greece
(€ 110 bn)
2011: 2nd packet of assistance for Greece
(€ 109 bn)
danger of a ‘bottomless pit’?
Prof. Dr. Christoph Gröpl · Debt crisis, debt brake
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Greek debt crisis
Europan Financial Stability Facility (EFSF)
bonds
private
investors (max. € 780 bn) EFSF
loans
(max. € 440 bn)
member
states in
difficulties
(Greece
etc.)
guarantees
(max. € 780 bn)
other member states
of the euro group
Prof. Dr. Christoph Gröpl · Debt crisis, debt brake
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Greek debt crisis
Legal aspect of ‘financial stabilisation’
Treaty on the Functioning of the European
Union (TFEU)
Art. 125:
‘A Member State shall not be liable for or
assume the commitments of governments
[[…]] of another Member State […].
[ ]’
Violation
by granting of loans?
Prof. Dr. Christoph Gröpl · Debt crisis, debt brake
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Debt crisis—‘Debt Brake’
Budgetary deficits: reasons
Revenue
Expenditure
Taxes etc.
• for
maintaining
the wellfare,
• for administrative purposes,
etc
etc.
Deficit
Repayment
Loans
Interests
Prof. Dr. Christoph Gröpl · Debt crisis, debt brake
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‘Debt Brake’
Hierarchy of Norms
EU
Law
supranational
law
Constitution
Parliamentary
Acts
other acts of state
national
law
Prof. Dr. Christoph Gröpl · Debt crisis, debt brake
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‘Debt Brake’
Art. 126 para. 1 TFEU (version 1993/2009)
ƒ
ƒ
annual deficit limited to 3% GDP
overallll debt
d bt restrained
t i d tto 60% GDP
Problem: lack of enforcement
Prof. Dr. Christoph Gröpl · Debt crisis, debt brake
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‘Debt Brake’
Art. 115 para. 1 Basic Law (version 1969)
ƒ
ƒ
sum of the loans limited by the total amount
of expenditures for investments
exceptions permissible to avert a ‘disturbance of the overall economic equilibrium’
(≈ national economic development)
Problem: insufficient jjudicial review
by the constitutional courts
Prof. Dr. Christoph Gröpl · Debt crisis, debt brake
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‘Debt Brake’
Art. 109 para. 3 Basic Law (new version 2009)
The budget [...] shall in principle be balanced
without
ith t revenues ffrom credits.
dit
(applicability: 2016/2020)
Exceptions:
ƒ deficits in times of economic downswing
ƒ unusual emergency situations
duty to immediate subsequent amortisation
Problem: excessive existing debt esp. of
some German constituent states
Prof. Dr. Christoph Gröpl · Debt crisis, debt brake
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Germany
and its 16
constituent
states
especially high
public debt burdens:
Berlin,
Bremen,
Saarland,
S h
Sachsen-Anhalt,
A h lt
Schleswig-Holstein
Prof. Dr. Christoph Gröpl · Debt crisis, debt brake
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‘Debt Brake’
Possible consequences for the ‘poorer’
constituent states in Germany
radical cut
of expenditure
abolishment
of the ‘debt
brake’
bail-out by
‘richer’ constituent states
merging with
‘richer’ constituent states
Prof. Dr. Christoph Gröpl · Debt crisis, debt brake
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‘Debt Brake’
Thank you
for your kind attention!
Prof. Dr. Christoph Gröpl · Debt crisis, debt brake
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Communication:
E-Mail:
[email protected]
Website:
http://www.groepl.uni-saarland.de
Prof. Dr. Christoph Gröpl · Debt crisis, debt brake
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