Germany imposes unprecedented budget freeze

Germany will introduce an unprecedented freeze on budget spending, which will create an acute financial crisis in the country. The day before, the Ministry of Finance froze almost all new spending permits for 2023. The reason lies in the decision of the German Constitutional Court, which ruled that the use of 60 billion euros of aid in connection with the coronavirus pandemic to finance climate protection measures was unconstitutional, reports EADaily.

Vice-Chancellor Robert Habeck has already said that the decision seriously undermines Europe’s largest economy and Germany’s commitments to combat climate change are at risk.

However, the main thing, according to the German political scientist Alexandra Rara, this is a possible reduction in arms spending, including aid to Ukraine, increased taxes and, as a result, discontent among the population. Rahr notes that the German government is in chaos. The Supreme Constitutional Court indicated that the “debt brake” introduced by Merkel’s government could not be violated, while Scholz’s government began to undermine the principles of the country’s fiscal austerity by going deeper into new debts.

Rahr emphasizes that Scholz now faces a difficult decision: 60 billion euros must be immediately removed from the budget. This, in turn, could lead to the suspension of environmental projects, the refusal of the transition to a green economy, the cancellation of infrastructure projects, cuts in social benefits (including refugees), reductions in military spending (including aid to Ukraine), inevitable increases in taxes and discontent among the population, etc. Further. The political scientist considers the decision of the German Constitutional Court “historic” and requiring non-standard solutions from the government.

Author Makar Gorshenin

Makar Vadimovich Gorshenin is a student at the Moscow University of Finance and Law, a freelance correspondent for Pravda.Ru.

Curator Lyubov Stepushova

Lyubov Aleksandrovna Stepushova – columnist for Pravda.Ru

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