The Ministry of Finance has imposed a budget freeze on all ministries. How and where are savings made? The traffic light government must find a new, common budget course.21.11.2023 | 2:32 min
What will become of the 60 billion euros?
The money is gone. More specifically: It was never there. You can just get the 60 billion euros not like imagine a pot full of money. Instead, these were so-called loan authorizations for 2021. So: the state would have been allowed to borrow 60 billion eurosto pay for Corona aid.
But things turned out differently. The money was not needed, the loans were not taken out. The idea of the traffic light was to provide loans instead Climate protection projects to use – also for the coming years. But that is exactly what the Federal Constitutional Court has banned.
The traffic light cannot use the money for Corona aid or to prevent future pandemics. The so-called annuality principle applies: loans must be taken out in the same year in which they were planned.
Since the Federal Constitutional Court’s ruling, it has been clear: the government must replan its budget. Corona loans may not be spent on climate protection. 16.11.2023 | 1:04 min
What did the court have a problem with?
Explained using an example: Let’s say on yours Current account is 3,000 euros, your overdraft facility is 1,500 euros. So you are not allowed to spend more than 1,500 euros. But what if you want to buy a climate-friendly electric car for 10,000 euros?
Suppose you then go to your bank and open a second account, with which you can take out a loan of 10,000 euros. Then your checking account remains in the black and you only have debts on the second account. The idea of the traffic light was similar.
A 60 billion hole, money that was intended for transformation and climate projects. What does this mean for the economy? Frank Bethmann reports. 16.11.2023 | 1:07 min
The budget of Finance Minister Christian Lindner (FDP) would not have incurred any new debt. They would be transferred to a second account, just that one Climate and transformation fund. Lindner would have complied with the debt brake on paper, but only on paper. According to the court, he would still have incurred debts, he just booked them somewhere else.
What exactly is the debt brake?
The debt brake is the principle of not spending more money than you have. So: Don’t buy an electric car if you can’t afford it.
Applied to the traffic light budget: Each federal government is only allowed to incur debts of 0.35 percent of gross domestic product. More is not possible, Debts are capped. This has been the case in the Basic Law since 2009. What is written in the Basic Law is binding and the Federal Constitutional Court monitors it.
The federal government and the opposition are facing “very big challenges” due to the Federal Constitutional Court’s ruling, says CDU politician Mathias Middelberg.16.11.2023 | 4:05 min
Why does the ruling have explosive impact on the traffic lights?
Because it’s about one fundamental conflict within the traffic lights works: For the FDP, the debt brake is a brand core – and according to critics from its own ranks, the party no longer has that many brand cores in the traffic light. The FDP is likely to stick to its conviction all the more: You save yourself out of crises.
The Greens and many in the SPD see it fundamentally differently. You say: You invest your way out of crises. For the Greens, for example, investments in climate protection are not only necessary in terms of climate policy, but also make economic sense. After all, these are investments in the future that are more important than the principle of the debt brake.
Budget freeze
:What else the traffic light can do
After the Karlsruhe ruling, the traffic light government is in financial distress. What to do? Which solutions are now being discussed?
by Kristina Hofmann
The Climate and Transformation Fund had hidden this fundamental conflict. Both new debt and compliance with the debt brake were possible on paper. However, that is now over.
How does the opposition react?
With criticism and demands for savings. It was the Union that took the matter to the Constitutional Court. The day after the verdict, CDU leader Friedrich Merz criticized during a recent hour in the Bundestag that the traffic light ignored the debt brake rules of the Basic Law.
Everything just doesn’t work anymore.
Friedrich Merz, CDU chairman
The Federal Constitutional Court’s ruling offers “the opportunity to turn climate policy upside down,” explains Lars Feld, economist and advisor to the Finance Minister.16.11.2023 | 5:16 min
What’s next?
However, the climate and transformation fund is not suddenly empty with the court’s ruling. In principle, the traffic light should now renegotiate which projects are particularly important and can still be financed. The SPD and the Greens want higher taxes to compensate for the 60 billion euros, but not the FDP.
It has been clear since yesterday: the government is missing 60 billion euros, including for climate protection projects. Against this background, discussions on the budget for the coming year will be difficult. 16.11.2023 | 1:43 min
