The Constitutional Court of Germany dealt a blow to the Government of Chancellor Olaf Scholz this Wednesday by ruling as unconstitutional the reallocation to a pro-climate fund of the 60 billion euros of extraordinary debt planned to alleviate the economic impact of the covid pandemic, which They had not been used.
The high court argues that the Executive coalition of social democrats, environmentalists and liberals thus violated the constitutional rule of debt brakes, which can only be suspended “in emergency situations.”
The ruling of the Karslruhe judges – the first that the TC issues on the debt brake to control the deficit – is a hard blow for the Government, which will be forced to review various aspects of its budgetary policy. This mechanism, enshrined in the Constitution since 2009, limits new public debt to 0.35% of annual GDP. It was suspended between 2020 and 2022 due to the coronavirus pandemic, and this year it is back in force.
After verifying at the end of 2021 that the authorized 60 billion debt had not been used, the then new Government decided to incorporate them into a special fund for “climate and transformation” not accounted for in the 2022 budget. The Bundestag (lower house of Parliament ) ratified it in February of that year. The ruling coalition wants to obtain 80% of electricity from renewable energy sources by 2030, an objective that has forced the Executive to budgetary juggling between the climate wishes of the Greens, the liberal desire for fiscal discipline and the intermediate discretion of the Social Democrats. SPD.
For the TC, which acted after a demand from the conservative opposition, allocating those 60,000 million euros to an objective other than the one planned is an a posteriori decision “incompatible with the Basic Law” (as the German Constitution is called), because the Government did not sufficiently justify the relationship between the emergency of the situation, the use of funds and the time lag.
The Executive had argued that the climate and transformation fund contributed to addressing economic consequences that came from the health crisis, but that did not convince the judges. “The legislator has not sufficiently demonstrated the link between the emergency and the measures adopted,” nor why an “amending budget” was adopted out of time. The Government will now have to compensate with other budgetary means for the 60 billion blocked, warned Doris König, vice president of the Constitutional Court.
In an appearance in Berlin after hearing the ruling, Social Democratic Chancellor Scholz said that the Government will “carefully evaluate” the ruling, as it possibly has “wide-ranging effects” for budget management both at the federal level and in the 16 länder (federated states). . The chancellor defended that the agreement to use money not spent on the pandemic, which was reached in the coalition negotiations of the three parties at the end of 2021, was taken with the conviction that it was a legally solid step.
The debate and vote on the 2024 budgets, scheduled for this Thursday in the Bundestag, will not be affected, assured the Minister of Finance, the liberal Christian Lindner. There was also the Minister of Economy, the Green Robert Habeck, who claimed that the climate and transformation fund, conceived in 2021, has supported citizens and companies with subsidies that contribute to reducing the price of electricity.
