No matter what the future debt brake may look like, public budgets must be consolidated qualitatively in order to maintain fiscal sustainability and the power to govern. This also means cutting out old habits. ‘That means action. We don't have a knowledge problem,’ states Michael Thöne in the Handelsblatt cover story on the reduction of subsidies and tax breaks. If everyone has to swallow bitter pills, it becomes politically easier and 20 billion euros or more can be generated each year.

Demographic change, digitalisation and the climate neutrality goal are putting Germany's economy through a great transformation. Maintaining and strengthening our model of value creation is crucial - but not easy in times of increasing labour shortages. In the Böll Foundation's Economic Atlas, Michael Thöne writes that immigration, AI and smart, not reality-shy policy-making can be part of the solution. Listen to the podcast here.

The KDZ Centre for Public Administration Research has appointed Michael Thöne to its Advisory Board. The KDZ in Vienna is an institute that is as rich in tradition as it is forward-thinking, bringing together research and practice for excellent scientific policy advice. "I am very much looking forward to the deepened exchange with the KDZ and the other trustees from Austria, Switzerland, Germany and South Tyrol," says the FiFo Director, expressing his gratitude for the honour.

The survey "NRW.BANK.Fokus Kommunen" enters its second year. In addition to investments and climate change, this edition focuses on the retention of skilled labor. We warmly invite all financial decision-makers of the municipalities to contribute their perspectives through the survey. The results will be published in August 2024 in an anonymized research report.

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In spite of its strong starting position, the sustainability of public finances in an ageing Germany is at risk. FiFo Policy Fellow and one of the "Five Sages" Martin Werding, with Benjamin Läpple and Sebastian Schirner, conducted the calculations for the Federal MoF's 6th Sustainability Report. If policies remain unchanged, German public debt will more than double to 140% of GDP by 2070 in the best-case scenario and rise to a dizzying 345% in the worst-case scenario. FiFo Report 33 provides the calculations and possible solutions in the full version. 

The people in small towns identify strongly with "their" companies, the firms with "their" municipalities. Both often face the same challenges: Skilled labour, housing, local transport. Nevertheless, there is less co-operation than is possible and helpful. In an interview with LandInForm 1/24, FiFo project manager Eva Gerhards and GGR partner Martin Albrecht explain how this potential can be mobilised with "KOWIS - Cooperative urban development with a focus on business in small towns", a strategic concept developed as part of a BBSR project.

Modernisation of the government is as unpopular as it is unavoidable in the German public sector. However, in view of upcoming staff shortages, innovation and red tape reduction can become an opportunity for bureaucracy instead of a threat. In the interwoven multi-level state, modernisation is likely to encounter even more obstacles, as Michael Thöne explains in his presentation at the renowned Loccum Finance Days. But federalism, he points out, also offers more opportunities and fields of experimentation for innovative modernisation.

The Institute's management and team welcome Werner Gatzer as a new FiFo Policy Fellow. The Chairman of the Supervisory Board of Deutsche Bahn AG was responsible for the federal budget as State Secretary for over 18 years until the end of 2023. "There is hardly any other person in Germany who has as much authority and practical experience in budgetary and fiscal policy as Werner Gatzer. We are very grateful to have him among our Fellows," remarks Michael Thöne on this very welcome addition.

As keynote speaker at the Political Ash Wednesday of the Gütersloh district employers, Michael Thöne discusses the growing challenges North Rhine-Westphalian municipal authorities face in the field of investment, climate protection and digitalisation. All of this must be managed with fewer staff. In view of the mounting wave of retirements, it is becoming increasingly important to modernise and focus public tasks: "We don't need a weak government, but a government that does the right thing".