The German government said on Tuesday it would immediately halt all new spending as it grappled with how to plug a gap of tens of billions of euros following a court ruling that has triggered a budget crisis in Europe’s largest economy.
The Constitutional Court, Germany’s highest, ruled last week that Chancellor Olaf Scholz’s government had acted improperly by taking money borrowed in 2020 to combat the coronavirus pandemic and shifting it to a new fund to finance environmental projects and green technology.
It also covers a special fund of about €200 billion that was set up to support companies in the aftermath of the pandemic and the energy crisis ignited by Russia’s war in Ukraine.
The economy minister, Robert Habeck, issued a dire warning of the ruling’s impact, even as Mr. Scholz raced to work out a solution.
“We are not yet able to see in detail what the impact of these fallouts could be, but it means that we will not be able to count on gross domestic product to grow next year,” Michael Hüther, director of the Cologne Institute for Economic Research, told a parliamentary committee.
The so-called debt brake, written into its Constitution, restricts annual borrowing to 0.35 percent of gross domestic product, or roughly €12 billion a year.
The original article contains 571 words, the summary contains 213 words. Saved 63%. I’m a bot and I’m open source!
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The German government said on Tuesday it would immediately halt all new spending as it grappled with how to plug a gap of tens of billions of euros following a court ruling that has triggered a budget crisis in Europe’s largest economy.
The Constitutional Court, Germany’s highest, ruled last week that Chancellor Olaf Scholz’s government had acted improperly by taking money borrowed in 2020 to combat the coronavirus pandemic and shifting it to a new fund to finance environmental projects and green technology.
It also covers a special fund of about €200 billion that was set up to support companies in the aftermath of the pandemic and the energy crisis ignited by Russia’s war in Ukraine.
The economy minister, Robert Habeck, issued a dire warning of the ruling’s impact, even as Mr. Scholz raced to work out a solution.
“We are not yet able to see in detail what the impact of these fallouts could be, but it means that we will not be able to count on gross domestic product to grow next year,” Michael Hüther, director of the Cologne Institute for Economic Research, told a parliamentary committee.
The so-called debt brake, written into its Constitution, restricts annual borrowing to 0.35 percent of gross domestic product, or roughly €12 billion a year.
The original article contains 571 words, the summary contains 213 words. Saved 63%. I’m a bot and I’m open source!