No more money?
This is what the budget freeze means
November 21, 2023, 11:49 a.m
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A ruling by the Federal Constitutional Court is tearing a 60 billion euro hole in the traffic light’s budget plans. The Federal Ministry of Finance reacts – and imposes a budget freeze on all departments. ntv.de provides an overview of what this is all about.
Why the budget freeze?
The trigger is a ruling by the Federal Constitutional Court. Last week, the reallocation of loans worth 60 billion euros in the 2021 budget was declared null and void. The money was originally used to dampen the consequences of the corona pandemic, but was then intended to be invested in climate protection measures. It is now missing from the climate and transformation fund. As a result, the federal government had already put certain projects that were supposed to be financed from the fund on hold – temporarily.
Which expenses are affected?
The budget freeze refers to determinations in the current budget that result in expenditure in future financial years. Specifically, the Federal Ministry of Finance is stopping commitment authorizations, i.e. the possibility of entering into payment obligations for the coming years. Among other things, this is intended to prevent any burden on the unresolved 2024 budget. According to “Spiegel”, the responsible State Secretary, Werner Gatzer, ordered in a circular that all commitment authorizations that were set out in individual plans 04 to 17 and 23 to 60 of the 2023 federal budget and are still available should be blocked with immediate effect. The individual plans concern the individual budgets of the ministries. Individual plan 60 refers, for example, to the climate and transformation fund.
What does this mean for the ministries?
Restrictions. For the time being, ministries can only use the affected budgets for payments in “special individual cases”. According to Gatzer’s letter, an application to the Federal Ministry of Finance will be due in the future, in which ministries will have to justify spending plans. It goes on to say that a particularly strict standard will be applied to prove a need. But not everyone is affected by the ban. Constitutional bodies such as the Bundestag, Bundesrat, Federal Constitutional Court and Federal President are excluded.
What’s next?
First of all, a group of experts should help the Bundestag and the federal government interpret the budget judgment and provide an assessment of the current situation. To this end, the Budget Committee is today hearing from experts who have previously been appointed by the various political groups. The federal government is currently under pressure, especially when planning the budget for 2024. It is therefore unclear whether projects from the climate fund have to be moved to it. It is therefore questionable whether the budget can be passed next Thursday as planned. Especially because it is unclear what will happen to the other special funds, but also to projects such as energy price caps. Various experts also do not agree on the budget situation for the coming year.
Economist Jens Südekum, for example, does not see next year’s core budget being directly affected by the Karlsruhe ruling. As long as a spending freeze in the climate and transformation fund is imposed, the 2024 budget can be passed. Tax lawyer Hanno Kube from the University of Heidelberg advises against making a hasty decision on the 2024 budget. Financial scientist Thiess Büttner from the University of Erlangen-Nuremberg sees a gap of at least 52 billion euros in the budget planning. “In order to present a constitutional budget, the federal government must review the planned use of all special funds without its own credit authorization, including beyond the special fund ‘Climate and Transformation Fund’,” it says in its statement.
What plans do the traffic light politicians have to plug the hole in the climate and transformation fund?
No uniform ones. SPD General Secretary Kevin Kühnert sees a budget emergency and is therefore calling for the debt brake to be suspended. On ARD he said that the SPD would implement this immediately if it were to govern alone. “Simply saving 60 billion somewhere in the budget with a lawn mower, making social cuts, reversing the transformation of our society, no longer supporting companies in international competition and thus losing jobs in Germany, that is something that the SPD was not elected for 2021.” He is also reacting to FDP parliamentary group leader Christian Dürr, who spoke out in favor of social cuts in an interview with the Funke media group. Federal Minister of Economics Robert Habeck called the FDP demand a sign of helplessness. “Where do you want to cut 60 billion euros in social benefits? That dramatically misses the drama of the situation,” he told AFP.