Government debt and the debt brake

In short: A state goes into debt when its spending exceeds revenue and it takes loans, mostly through government bonds. The debt brake limits new borrowing in Germany.

In more detail: The debt ratio sets government debt in relation to bruttoinlandsprodukt-bip.

In detail

• Deficit and debt level: The deficit is the annual shortfall, the debt is the total.
• Government bonds: Investors lend money to the state and receive interest.
• Maastricht criteria: In the EU debt should stay below 60 % and the deficit below 3 % of GDP.
• Debt brake: In the Basic Law since 2009; exceptions in emergencies.
• Pros and cons: Investing in the future versus burdening future generations.
• Interest burden: High interest makes new debt more expensive (zentralbank-und-leitzins).
• Comparison: Government debt is not like household debt, as a state exists permanently.