BERLIN (Reuters) – German justice ruled on Wednesday unconstitutional Berlin’s decision to reallocate 60 billion euros of unused COVID-19 loans to a climate and energy transition fund.
The decision, taken by the Constitutional Court in Karlsruhe, complicates the budget negotiations taking place this week within the tripartite coalition of Chancellor Olaf Scholz, whose popularity is at half mast in a country close to a new recession.
The 60 billion euros had been allocated to initiatives such as improving the energy performance of buildings, subsidies for renewable energies, as well as support for energy-hungry companies.
The Minister of Finance, Christian Lindner, will have to face increased scrutiny over his control of spending, a few days before meeting his French counterpart Bruno Le Maire for discussions on budgetary discipline throughout the European Union.
Olaf Scholz took note of the Constitutional Court’s decision, saying it would have significant consequences for the government’s Climate and Transformation Fund (KTF). The coalition will now have to look for other sources of funding.
“We will now quickly revise the economic plan, incorporate the necessary changes and adopt new ones,” the Social Democratic leader said on social media.
Christian Lindner judged for his part that this decision would have a significant impact on the federal and national budgets, but that the government would respect it and not interrupt the process of finalizing the budget for 2024.
The government decided in December 2021 to transfer debt capacity authorized in the context of COVID-19 but not used at the time, to a climate fund.
(Reporting Maria Martinez and Christian Kraemer; French version Kate Entringer, edited by Jean-Stéphane Brosse)
©2023 Thomson Reuters, all rights reserved. Reuters content is the intellectual property of Thomson Reuters or its third party content providers. Any copying, republication or redistribution of Reuters content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters. Thomson Reuters shall not be liable for any errors or delays in content, or for any actions taken in reliance thereon. “Reuters” and the Reuters Logo are trademarks of Thomson Reuters and its affiliated companies.