'Father of the black zero': Germany's love affair with austerity

Former Finance Minister Wolfgang Schäuble was "the face" of the black zero. His 2014 financial plans led to Germany not taking on new debt for the first time since 1969, resulting in a balanced budget. It was achieved by financing spending hikes solely with revenues while reducing public debt.

Germany's appreciation for penny-pinching to ensure it didn't rack up fresh debt elicited many wacky homages. Seen here is a "black zero" cake presented to the state parliament of Lower Saxony by the neoliberal Free Democrats (FDP) in 2015.

In 2009, Germany's constitution was amended to include a "debt brake," ("Schuldenbremse"), despite economists largely agreeing that it does not reduce economic volatility. German states were not permitted to run any structural deficits, and the federal government could only run a structural deficit of less than 0.35% of GDP.

It is something of a linguistic testament to a cultural truth that the German word for debt, Schuld, is also the word for guilt. Germans are content to live with decaying infrastructure, renting instead of buying and not having modern-style credit cards if it means reducing debt. Here, Baden-Württemberg's then-Finance Minister Nils Schmid celebrated the "black zero" with a statue in 2014.

When Germany was thought to be heading toward recession in 2019, the wisdom of a balanced budget was challenged. Germany's resistance to spending and investing created an economy with little room for innovation, expansion or for startups to flourish. According to the keenly watched ifo Business Climate Index "not a single ray of light was to be seen in any of Germany's key industries" that year.

Germany's penchant for a balanced budget not only hindered investment in the country, it also affected its neighbors. As an export-driven economy, Germany profits from exporting goods, but insufficient reinvestment of all that extra capital, paired with a low-wage policy that stymied spending, meant the surplus remained stubbornly high, at the expense of other EU countries.

Across Germany, being debt-free has been marked with strange celebrations, including members of the Christian Democrats posing with a cardboard cutout of a black zero. The city of Dusseldorf even kept a clock marking how many years it has been debt-free, seen here in March 2016. (This gallery was updated on December 27, 2023, on the occasion of Wolfgang Schauble's death.)