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When the Party’s OverThe Politics of Fiscal Squeeze in Perspective$
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Christopher Hood, David Heald, and Rozana Himaz

Print publication date: 2014

Print ISBN-13: 9780197265734

Published to British Academy Scholarship Online: May 2015

DOI: 10.5871/bacad/9780197265734.001.0001

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Fiscal Squeeze in Germany:

Fiscal Squeeze in Germany:

Drifting Away from the Politics of the Switching Yard?

(p.161) 8 Fiscal Squeeze in Germany
When the Party’s Over

Martin Lodge

Kai Wegrich

British Academy

Decisive fiscal squeeze might surprise observers of the German political system, insofar as party political dynamics, welfare state complexity, and intergovernmental financial arrangements are commonly said to inhibit decisive reforms. This chapter traces the fiscal squeeze carried out in post-unification Germany in the 1990s and 2000s and highlights how the politics of fiscal squeeze had damaging political consequences for the Social Democratic Party. Squeeze at the federal government level was largely about ‘natural wastage’ in staff numbers and targeted cutbacks. The welfare state witnessed considerable reform as a result of cumulating pressures resulting from unification, triggering significant political consequences. Finally, squeezing at the level of the intergovernmental fiscal transfers reflected attempts to contain fiscal pressures on local governments, and wider pressures within the system of German federalism, leading to the creation of a constitutional ‘debt brake’ on public budgets.

Keywords:   Germany, post-unification, fiscal squeeze, welfare reform, federalism, drift, debt brake, Social Democratic Party

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