2023-11-22 09:29:24
A wind of panic is blowing over the German parliamentary majority. At the end of November, members of the Bundestag must approve the draft budget for 2024. However, no one yet knows what it will really look like.
A vast part of the policy of Social Democratic Chancellor Olaf Scholz and his environmentalist and liberal partners was in fact called into question on November 15 by a spectacular ruling by the Constitutional Court. The judges in Karlsruhe invalidated the reallocation, towards a Climate and Transformation Fund, of a budgetary credit of 60 billion euros, initially intended for the fight against the pandemic and not used in 2021.
A very hard blow for the government
At the time, due to the exceptional crisis linked to Covid-19, Germany had lifted its very strict rule of “debt brake”which limits new state debts to 0.35% of GDP, far from the European rule of 3%… Once the crisis has passed and the debt brake is put back into effect, impossible according to the supreme judges of ‘allocate this sum to a fund not included in the budget.
Consequence: the Climate and Transformation Fund lost a third of its allocation of 212 billion euros. The blow is very hard for the German government, which was counting on these 60 billion euros to accelerate the process of decarbonization of the economy, via projects in e-mobility, geothermal energy, energy renovation of buildings, etc.
Many questions remain unanswered
For a week, Olaf Scholz’s government has appeared totally helpless, with no real plan B in its baggage. However, time is running out and many questions remain unanswered: does the disappearance of these 60 billion euros affect the current budget for 2023 and that of 2024? If the Minister of Finance believes not, opinions are very varied as reflected, this Tuesday, November 21, a question-and-answer session in the Bundestag with experts.
What trade-offs will Berlin now have to make to compensate for these 60 billion euros? The liberals of the FDP refuse a tax increase, the social democrats reject cuts in social spending and the Greens are firmly opposed to reducing ecological ambitions… Olaf Scholz’s tripartite coalition has also made the ecological transformation of country the backbone of its policy.
Another question: does this court decision call into question another special fund of 200 billion euros, which the government had set up in 2022 to react to the economic and energy consequences of the war in Ukraine? The ecological minister of the economy fears it.
Extremely tense economic environments
Economic environments are also extremely tense. Bernhard Osburg, of the ThyssenKrupp metallurgical group, believes that “industrial transformation” from the country ” is in danger “ and fears that Germany will have to review its climate targets. His group was counting on this climate fund to support its decarbonization process, via the development of a vast hydrogen network.
Same tension within Deutsche Bahn. The German railway company wanted to finance half of the 25 billion euros of investments planned from 2024 in the renovation of its network. Will it have to reconsider its objective of doubling the number of travelers by 2030? Management met urgently on Tuesday, November 21 to talk about it.
What about, also, the establishment of micro-electronics megafactories? The government had approved subsidies of more than 15 billion euros to the American Intel and the Taiwanese TSMC, which could in turn be called into question.
A risk of prolonging the recession
“Even before this judgment, we found ourselves in a deep investment crisis. This ruling will strengthen it and also risks prolonging the current economic recession”regrets the economist Jens Südekum, of the University of Düsseldorf, questioned by the deputies on Tuesday November 21.
“At the international level, this is a very bad signal, while countries like the United States attract investments for the future, he adds. We must do everything to maintain the investments planned by the climate fund. » Responses expected on all these themes between now and the plenary session of Parliament, starting Tuesday, November 28.
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The 29 “special funds”
Germany has 29 “special funds” intended to finance specific activities on behalf of the federal government, outside the budget. They represent 869 billion euros. The first of these was established in 1953 to manage funds from the Marshall Plan of reconstruction after World War II.
If they are decided by a two-thirds majority of the deputies, they cannot be questioned. This is the case of the 100 billion euro fund intended to finance the modernization of the German army, decided after the Russian attack against Ukraine in 2022.
On the other hand, this is not the case for the “boom” fund, created in 2022 to react to the economic and energy consequences of the war and endowed with 200 billion euros. It could be vetoed by the Constitutional Court, just like the 60 billion from the climate fund.
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