In 2009, the German Parliament approved a balanced-budget amendment of the
German Basic Law (Article 109). The amendment prohibited any structural deficit
for local government (Länder) and allowed a very limited deficit (0.35 percent of
gross domestic product [GDP]) for the federal state. The goal was a balanced budget by
2016. Since 2012 and up to the COVID-19 pandemic, Germany has run budget surpluses.
In 2012, the Italian Parliament approved a reform of Article 81 of the Constitution,
aiming to enshrine into the Constitution a structural balanced-budget rule. Italy
has run a fiscal deficit ever since.
Certainly, there are reasons other than political culture that explain the different
fiscal behavior of Italy and Germany in this period. In particular, Germany has enjoyed
an unexpectedly dynamic recovery since 2010 (Rietzler and Truger 2019, 12),
whereas Italy did not return to a positive growth rate until 2015 and has had sluggish
growth ever since.
is Associate Professor History of Political Thought at IULM University in Milan and a Presidential Scholar in Political Theory at Chapman University. He is also the Director General of the Italian free-market think tank, Istituto Bruno Leoni and an adjunct fellow at the Cato Institute."