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Debt Brake

All articles tagged with #debt brake

politics2 years ago

Germany's Coalition Parties Clash Over Budget Crisis and Debt Brake

Germany's coalition partners, the Social Democrats (SPD), Greens, and Free Democrats (FDP), failed to resolve a 17-billion-euro hole in next year's budget, increasing uncertainty about financial plans in Europe's largest economy. The budget crisis arose when the Constitutional Court blocked the reallocation of unused pandemic emergency funds to climate projects. The parties are at odds over whether to lift Germany's self-imposed limit on net new borrowing in 2024, known as the debt brake. The FDP opposes lifting the debt brake and favors spending cuts, while the Greens want to invest in climate projects. The coalition's failure to reach an agreement has raised tensions and boosted support for the opposition conservatives and far-right Alternative for Germany (AfD).

via Reuters|
#budget-crisis#coalition#debt-brake
economy2 years ago

Germany's Budget Crisis Sparks Fear and Uncertainty for Climate Commitments and EV Industry

Germany is facing a billion euro budget crisis after the country's highest court ruled that the government's 2024 budget violated fiscal rules. The ruling has jeopardized the coalition government under Olaf Scholz and raised fears of economic stagnation. The court's decision prevents the government from diverting €60bn of borrowing from its pandemic emergency fund into a climate and transformation fund, hindering Germany's green revolution and industrial modernization. The crisis has also cast uncertainty on future financial support for Ukraine, the EU budget, and other areas of spending. Calls for reforming the debt brake rule, which limits the government's structural deficit, are growing louder, but opposition from fiscally conservative parties poses a challenge. The government's credibility is at stake, and the country's economic stability is in danger.

via The Guardian|
#budget-crisis#debt-brake#economic-stagnation
politics2 years ago

Germany's 'Debt Brake' Dilemma: Budget Crisis and Frozen Spending

Germany is grappling with its "debt brake" as the country faces economic challenges and a budget crisis. The debt brake, which requires the government to balance its budget, has been suspended multiple times due to the coronavirus pandemic and Russia's invasion of Ukraine. The recent ruling by the Federal Constitutional Court declaring the financing of the Climate and Transformation Fund unconstitutional has further complicated the government's budget planning. The coalition government, consisting of the Social Democrats, Greens, and Free Democrats, is divided on how to address the budget crisis, with differing positions on climate action, social issues, and fiscal responsibility. The country's economic growth prospects are bleak, and there are calls for reforming the debt brake to allow for necessary investments in infrastructure, green restructuring, and skills development. However, any reform would require a two-thirds majority in parliament, which is currently lacking. The conservative opposition parties are against changes to the debt brake, arguing that it is crucial for a fair budget for future generations. The budgeting week in the Bundestag is expected to be filled with debates and disagreements on Germany's path forward.

via DW (English)|
#budget#coalition-government#debt-brake
politics2 years ago

Germany's Lindner calls for suspension of debt brake to avert budget crisis

German Finance Minister Christian Lindner has indicated that the government plans to suspend the country's debt brake following a constitutional court ruling that deemed the repurposing of emergency COVID-19 funds for the ruling coalition's green agenda as unconstitutional. The ruling limits the government's ability to draw from special funds, forcing it to retroactively include nearly €40 billion of spending for an energy price brake in its regular budget. This has led to the suspension of the debt brake by declaring an emergency. The government will present a draft supplementary budget for 2023 and seek parliamentary approval for an "extraordinary emergency situation."

via POLITICO Europe|
#budgetary-crisis#constitutional-court#debt-brake
economy2 years ago

Germany's Budget Crisis Threatens Industries and Political Stability

Germany is facing a budget crisis as its constitutional court ruled that reallocating unused debt originally designated for emergency Covid-19 funding to current spending plans was unlawful. The finance ministry has frozen spending across all ministries, leading to potential political instability and endangering the future of the coalition government. The roots of the crisis predate the pandemic and stem from Germany's debt brake, which limits government debt and the size of the budget deficit. The court's ruling has left a 60-billion-euro hole in the budget, and the government is scrambling to find solutions, including potential changes to the constitution and reforming the debt brake after the next election.

via CNBC|
#budget-crisis#coalition-government#constitutional-court
politics2 years ago

Germany's Urgent Budget Crisis: What You Need to Know

German Chancellor Olaf Scholz has promised to present new budget plans "very quickly" to Parliament after a constitutional court ruling last week caused financial disarray and a €60 billion hole in the country's budget. The ruling has delayed next year's budget and may require an emergency budget for this year. Scholz's coalition is determined to move forward with new budget plans but has not specified where spending cuts will be made. The ruling will likely limit the use of special funds to circumvent the debt brake, and legal experts argue that a supplementary emergency budget will be necessary to account for energy subsidies. Finance Minister Christian Lindner evaded making a clear reply on potentially relaxing debt rules for this year.

via POLITICO Europe|
#budget-plans#constitutional-court-ruling#debt-brake
economy2 years ago

Germany's Budget Crisis Deepens with Freeze on New Spending

Germany's finance ministry has implemented a spending freeze on all federal ministries following a ruling by the constitutional court that created a €60 billion hole in the government's budget. The freeze halts most new spending authorizations and raises concerns about the government's ability to draw money from special funds. Lawmakers are assessing the impact of the ruling, which may require a consolidation of €52 billion in the budget planning for the coming year. There are growing calls to suspend the debt brake and reform it, as the government struggles to finance its green transition and protect German industry.

via POLITICO Europe|
#budget-crisis#constitutional-court-ruling#debt-brake
defense-budget2 years ago

Germany's Defense Budget Rises Amidst Budget Cuts and Unused Aid Package

Germany's Cabinet has approved a draft 2024 budget that includes lower spending overall but an increase in defense spending, as the country aims to meet NATO's target of spending 2% of GDP on defense. The budget calls for spending of €445.7 billion, down nearly 7% from this year, with defense spending set to rise by €1.7 billion to €51.8 billion. Germany plans to reach the NATO target with the help of a special €100 billion fund and aims to meet it through its regular budget in the future. The government is returning to compliance with Germany's debt brake rules, which limit borrowing, and has agreed not to raise taxes.

via Defense News|
#budget#debt-brake#defense-budget
politics2 years ago

Germany Implements Austerity Measures, Sparking Political Turmoil

Germany's government has adopted plans to cut its budget for next year by €30.6 billion, affecting various sectors including health, childcare, and public transport. The cuts, driven by ballooning public debt from the pandemic and the energy crisis triggered by Russia's war in Ukraine, have sparked political battles within the ruling coalition and across the political divide. Finance Minister Christian Lindner emphasized the need to adhere to stricter fiscal policies and reduce debt without burdening taxpayers. The budget cuts have led to disagreements among coalition partners, with the Greens particularly upset about cuts to the parental leave allowance. Opposition parties and labor unions have criticized the cuts, while defense spending will increase slightly but may not be sufficient to meet NATO commitments in the long term.

via POLITICO Europe|
#budget-cuts#coalition-infighting#debt-brake