Consequences of the KTF ruling
Habeck warns of job losses and industrial migration
November 17, 2023, 4:15 p.m
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The federal government is not allowed to move 60 billion euros within special funds. For Economics Minister Habeck, this is a judgment with consequences that cannot yet be foreseen. Because other countries are investing massively in restructuring their economies. It is a global competition. And Germany is now missing a lot of money.
Economics Minister Robert Habeck is sounding the alarm after the Federal Constitutional Court’s ruling on the Climate and Transformation Fund (KTF). In a video he warns of the loss of jobs in industry. These are “particularly threatened by the verdict,” he said. The verdict is now sometimes equated with the fact that 60 billion euros are missing for climate protection. But that is “at best only a small part of the truth”. Rather, “60 billion were missing for the transformation and to support the industry”. After the verdict, the Green politician joined forces with business associations and unions. On Friday morning there was another meeting with representatives of medium-sized businesses.
In the video, Habeck goes on to say that there was a lack of money for existing industries, such as the steel and chemical industries, as well as for the development of new industries, for example in the solar sector. With “the threat to this country’s industrial strength,” jobs are also at risk. However, the federal government’s goal remains to renew prosperity and value creation in Germany – among other things through the transformation of industry. The verdict is therefore “without question a step backwards for all the plans that were made.” He now wants to work “with all his might” in the next few days and weeks to find answers.
“It’s a myth that the market alone decides”
At the meetings with business and trade unions it became clear that there was great concern and uncertainty among companies and employees. Habeck emphasized that the financing of the KTF is not just a climate policy issue, but above all a location issue. He will continue to campaign vigorously for financing. “The judgment of the Federal Constitutional Court is fundamental and the federal government is examining the effects closely. Of course we will respect it,” said Habeck in Berlin. “As a coalition, we will face the problem together and work together to find solutions.”
Habeck warned against losing sight of the international situation in the German debate. The transformation of industry is taking place globally because many countries and companies have recognized that these are the markets of the future. “The global competition is based on climate technologies. So the question is not whether green steel will be produced, but whether it will also be produced in Germany,” he added, referring to the USA, for example, which has implemented the Inflation Reduction Act (IRA) program support the local economy.
The companies would have been on their way long ago. “But – just like companies in the USA and other countries – they need support and insurance during the transition so that they can invest in our country,” warned the Green politician. “It’s a myth that in other countries the market alone does this. Other countries massively support their industry.”
Ministry expects lower GDP after verdict
The Ministry of Economic Affairs estimates that the ruling will slow growth in Germany. “According to initial estimates, a loss of investment funds could reduce growth by around half a percentage point in 2024,” said an insider. “The ruling could therefore have a negative impact on economic growth.” Even before the court ruling, the EU Commission had seen Germany as bringing up the rear in terms of growth in the Eurozone next year, with an expected increase of 0.8 percent.
The federal government’s current economic forecast assumes an increase in gross domestic product (GDP) of 1.3 percent for 2024, after a contraction of 0.4 percent in the current year.
The Federal Constitutional Court had declared the climate fund set up by the traffic light government to be unlawful and also declared a supplementary budget for the traffic light to be invalid. There is now a lack of 60 billion euros to finance measures to combat climate change and promote industry. The traffic light government made up of the SPD, Greens and FDP wants to clarify how this can be achieved in parallel with the ongoing 2024 budget negotiations.