Fiscal consolidation in German and Greek local governments : reform attempts, supervision and local measures

Fiscal consolidation in Greek and German local governments differs for many reasons. While some German local governments experienced a long period of austerity, driven by economic decline and federal and state measures, the global financial crisis and "troika" programme caused the need for harsh austerity measures in Greece. In addition, there is a different institutional context for local governments in both states, accompanied by different revenue autonomy and state influence. Therefore, local options in Greece were limited, and local governments had to focus on spending cuts, whereas German local governments largely relied on increasing tax rates. The one commonality is in the field of regulation, when both states strengthened fiscal rules and supervision and established a bailout programme. However, intense monitoring, the implementation of fiscal rules and the "top-down" actions of supervisory bodies in Greece fundamentally exceed German practice. Finally, fiscal consolidation in Greece was much more difficult and went hand in hand with minor local discretion.