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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 2 1 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 3 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 4 2 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 5 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 6 3 ‘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 7 ‘Debt Brake’ Art. 126 para. 1 TFEU (version 1993/2009) 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 8 4 ‘Debt Brake’ Art. 115 para. 1 Basic Law (version 1969) 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 9 ‘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: deficits in times of economic downswing 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 10 5 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 11 ‘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 12 6 ‘Debt Brake’ Thank you for your kind attention! Prof. Dr. Christoph Gröpl · Debt crisis, debt brake 13 Communication: E-Mail: [email protected] Website: http://www.groepl.uni-saarland.de Prof. Dr. Christoph Gröpl · Debt crisis, debt brake 14 7