Germany's budget plan hit by €60bn court ruling
Another Slumped Europe's Chancellor Olaf Scholz, Coalition Under Whose The Brink Fractious Constitutional Teeters As Major An Of Dealt Blow Popularity On A Already Ruling The Largest Economy By Has The Court Recession To
Germany's ruling coalition was scrambling to fix a large hole in its finances after a court ruling blocked the government from transferring unused emergency funds from the pandemic towards green initiatives and industry support.
The decision by the constitutional court to wipe €60bn from the budget has prompted the German government to postpone the formal vote of the budget committee until next week. The 2024 budget will however be passed as planned on December 1, according to members of the budget committee.
The ruling by the constitutional court dealt a major blow to an already fractious coalition under chancellor Olaf Scholz, whose popularity has slumped as Europe's largest economy teeters on the brink of another recession.
"The court's decision brings a budgetary dilemma, forcing the government to choose between slashing climate spending or finding new sources of financing," said Yesenn El-Radhi at ratings firm DBRS Morningstar.
It will also heap pressure on the fiscally hawkish finance minister Christian Lindner, who has yet to divulge a promised Plan B on which projects would have to be put on hold or where more money might come from.
It could also put him on the back foot in negotiations to reform the European Union's fiscal rules in a pan-European deal by the end of the year.