Federal Constitutional Court rules diversion of COVID-19 response budget unconstitutional
Finance Minister orders all ministries to freeze new spending plans
Investment and subsidy budgets for semiconductor companies such as TSMC and Intel are also suspended.
The German Federal Parliament indefinitely postponed next year’s budget vote following a ruling by the Federal Constitutional Court. As a result, concerns were raised about whether the German government’s plan to strengthen support for the war in Ukraine next year could be implemented as originally planned.
According to foreign news outlets such as the Financial Times (FT) on the 22nd (local time), the German Constitutional Court on the 15th ordered 60 billion euros (approximately KRW 84.9354 trillion) of the budget for responding to COVID-19 to be diverted to the budget for climate crisis measures. It was decided that the federal government’s budget plan for this year and next year was unconstitutional.
The ruling caused an inevitable setback to spending plans worth hundreds of billions of euros. The Constitutional Court ruled that the government’s plan failed to comply with debt limit measures aimed at limiting the deficit to 0.35% of gross domestic product (GDP).
As a result, the next day, the National Assembly canceled the budget approval process for the following year. The vote, which was delayed for a week, ultimately did not take place.
Since the Federal Assembly ends its session on the 15th of next month, it is predicted that even if the government convenes an emergency meeting, it will be difficult to complete the vote on the budget within this year. If a budget is not agreed upon, spending by all federal government departments will be restricted on the first day of the following year until the budget is finalized.
German Finance Minister Christian Lindner has sent letters to all government ministries ordering them to immediately freeze any new spending plans that have not yet been confirmed.
As the situation progressed, the budget that the political world had intended to support the war in Ukraine and invest in semiconductor companies was also blocked.
Germany’s traffic light coalition (Social Democrats, Liberal Democrats, Green Party) previously announced plans to double military aid to Ukraine next year and increase defense spending to more than 2% of GDP, the North Atlantic Treaty Organization (NATO) recommended standard. .
In addition, investment in Taiwan’s TSMC, the world’s largest foundry (semiconductor consignment production) company, and plans to provide subsidies to semiconductor companies such as Intel were halted, making the future uncertain.
Members of the House of Representatives Budget Committee issued a joint statement, saying, “(The court) presented us with a significant challenge,” and added, “We want to respond carefully and prepare a budget that takes into account all the arguments in the ruling.”
Source: Donga
Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.