The German Finance Ministry froze new budget expenditures after the decision of the Constitutional Court
Yesterday evening, November 20, the German Ministry of Finance made a decision on freezing most new budget expenditures. This means that German ministries will be able to make payments on previously agreed upon items, but will not be able to take on expenditure obligations for new expenses.
This decision of the German Ministry of Finance is due to the fact that last week the German Constitutional Court banned the government to transfer €60 billion, allocated several years ago to fight the pandemic, to a fund to combat climate change. Germany has fairly strict restrictions on government borrowing – no more than 0.35% of the country’s GDP – which can only be relaxed in extreme circumstances. This relaxation was made during the COVID-19 pandemic, so the government took out a loan that included this €60 billion. The court has now concluded that transferring this money to other purposes does not meet “constitutional emergency borrowing requirements.” .
The decision of the Constitutional Court violated the plans of the German government to invest in areas such as updating the railway infrastructure, green energy, etc. The government noted that this decision will also affect some other funds and budget expenditures, so it affects the budget as a whole. German Economy Minister Robert Habeck has already criticized the current restrictions on government borrowing, calling them too inflexible and calling for them to be eased.
