Germany wants to suspend the debt brake | Nachrichten.at

2023-11-23 16:09:00

Finance Minister Christian Lindner (FDP) announced on Thursday in Berlin that he would present a supplementary budget to the cabinet next week in consultation with Chancellor Olaf Scholz (SPD) and Vice Chancellor Robert Habeck (Greens).

A ministry spokeswoman added that the federal government would propose to the Bundestag to declare an extraordinary emergency. In this way, loans that have already been used this year are to be legally secured subsequently.

According to the ruling of the Karlsruhe judges, without the protection there would have been a risk of a constitutional violation in the 2023 budget. The judges decided that the federal government was not allowed to reserve emergency loans for later years. According to experts in the Economic Stabilization Fund, that is exactly what the federal government did to curb energy prices.

This year, 37 billion euros had already been spent by the end of October, and more money is expected to be added by the end of the year. In addition, aid is to be secured from a fund for flood victims, which was created in 2021 under similar conditions. In total, loans amounting to around 45 billion euros are to be placed on a constitutionally secured basis. “No new debt will be taken on, but rather the funds that have already been used to deal with the crisis will be placed on a secure legal basis,” emphasized Lindner’s spokeswoman.

The minister explained: “I see it as my job to clear the air now.” Only then can we talk about the budget for the coming year and the next few years.

Emergency must be decided

In order to use the exception to the debt brake, the Bundestag must decide on an emergency. According to Article 115 of the Basic Law, this is provided for “in the event of natural disasters or exceptional emergency situations that are beyond the state’s control and significantly affect the state’s financial situation.” According to experts, to justify such an emergency, the federal government could argue that the consequences of the energy crisis were still noticeable at the beginning of 2023. In a hearing in the Bundestag, experts made it clear that, in their view, this justified another emergency resolution.

The federal budget for the current year should be put on a constitutionally sound footing in good time through the supplementary budget before the end of the year. However, it is still unclear when the federal budget for the coming year can be decided. According to the Federal Constitutional Court’s ruling, the draft must be thoroughly overhauled.

The traffic light factions of the SPD, Greens and FDP have therefore canceled the budget resolution planned for next week in the Bundestag. But they haven’t completely given up on closing before the end of the year. The coalition says there is the possibility of shortening deadlines and special meetings. Scholz said on Wednesday evening that he expected a quick and very timely conclusion.

Ampel wants to stick to plans

He also emphasized that the traffic light wanted to stick to its plans for social, climate and economic policy. It is still unclear what exactly will happen to the projects that should be financed from the climate and transformation fund. According to the Karlsruhe ruling, this special pot for climate protection and the development of a CO2-neutral economy is missing 60 billion euros, which had already been firmly planned. The court had declared the reallocation of these loans, which were actually approved to combat Corona, invalid.

The coalition says that the legally binding expenditure commitments will still have to be met next year. The fund also has income from the CO2 price, among other things. But the remaining money will not be enough for all projects. Where cuts are made, prioritized or eliminated entirely is a matter of great debate between the SPD, the Greens and the FDP.

Reform encouraged

Economists and politicians from the SPD and Greens had suggested reforming the debt brake to solve the problem. On Thursday, a CDU Prime Minister surprisingly called for it. “The debt brake is a good idea in the sense of sound finances. However, I think its current design is dangerous,” said Berlin’s governing mayor Kai Wegner on X (formerly Twitter) as well as in an interview with the magazine “Stern”. “Because, as I have been saying for a long time, there is a fear that the debt brake will increasingly become a brake on the future.” In his opinion, loans should be permitted for investments, said Wegner.

CDU party leader Friedrich Merz had previously defended the debt brake on the ARD talk show “Maischberger”. “I don’t see at the moment that we need to approach the debt brake,” he said.