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The impending collapse of German municipal financesis due to rising expenditure, particularly on services such as youth welfare, integration support and care assistance. In accordance with the principle of causal connectivity – ‘who orders, pays’ – there are frequent calls for better federal funding of these municipal services, which are determined at central government level. In a new FiFo Discussion Paper, Michael Thöne examines solutions based on the ‘who orders, pays’ principle and on the principle of ‘who implements, pays’. As neither promises a sustainable solution, he recommends considering the complete centralisation of these services. Shifting the responsibility for implementation upwards too would, in practice, be significantly less demanding than it appears at first glance.
What role do sound local government finances play in a municipality’s ability to provide affordable housing? This is a highly topical issue in numerous countries worldwide. The United Nations Human Settlements Programme (UN-Habitat) and the Canada Mortgage and Housing Corporation (CMHC) have launched an international research project on this topic. Germany is among the first countries to be studied. FiFo Director Michael Thöne said: “Thank you very much for the honour of being the first interviewee worldwide for this important new project. I wish you every success and look forward to more of these transatlantic exchanges”.
The bar is set high for a future-proof structural and regional policy. On behalf of the Federal Environment Agency, FiFo Köln, together with Difu and the Öko-Institut, is investigating the extent to which support programmes within the Pan-German Funding System (GFS) are already striving for an ecologically sustainable, forward-looking and transformation-oriented structural policy. Fourteen programmes were analysed, including the Joint Task ‘Improvement of the Regional Economic Structure’ (GRW). The comprehensive interim report, which has now been published, provides the centrepiece of the empirical analysis. The results show that, whilst relevant approaches do exist, they are often not implemented systematically.
Today, public budgets must do more than simply allocate funds – they must shape the future. In the face of the climate crisis, demographic change and growing pressure to deliver results, mere resource allocation is no longer enough; impact is needed. The newly published UBA Report 36/2026 on the FiFo project demonstrates how green budgeting offers a modern, impact-oriented approach to budgetary management whilst also serving as a tool for environmental and climate protection. Drawing on international experience, the report develops actionable approaches for Germany – for a sustainable fiscal policy that provides targeted governance and delivers societal impact.
Too many young people fail to find a vocational training place. Since last year, companies in Bremen are required to pay a training levy to counteract this problem. These funds will be used to financially reward companies that provide vocational training. The Berlin state government has also decided to introduce such a training levy. However, the reforms are controversial. In the current issue of the „Wirtschaftsdienst“, FiFo researcher Eric Schuß discusses the pros and cons of such a levy and explains in which cases it can be successful and when not.