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Regional finances

Regional finances

"Countries, regions and local authorities must remain financially capable of shaping their own future."

The financial situation of many regions in Germany is becoming dramatically worse. The division into rich and poor local authorities is deepening - many cities and districts seem trapped in a downward spiral of over-indebtedness, migration and declining attractiveness.

The importance of demographic change for a reorientation of compensation policy is increasing all the time. This means that less financial resources are available in the regions concerned for the maintenance and expansion of infrastructure and for the promotion of economic development. So what should a new financial concept look like that takes account of the requirements of a spatial compensation policy, a spatial opportunity policy and the need for sustainable and stable public finances? Which instruments are suitable for creating perspectives for structurally weak regions throughout Germany, especially regions affected by, for example, population ageing, emigration and poverty among the elderly? The time has come for a change of system in which the financial relations between the federal, state and local authorities are being redesigned.

It is becoming increasingly important for local authorities to systematically link not only (financial) economic criteria but also technical requirements and sociodemographic and economic framework conditions with the municipality's overarching goals in financial planning. This demography-oriented financial planning shows local decision-makers the scope and control options and anticipates possible effects. On the expenditure side, it will be more important in future to consolidate in the right places. Prognos AG develops solution concepts for this.