Now that the German Constitutional Court has decided that the government may not use additional money from the Coronavirus Recovery Fund, the German budget must be reviewed. The decision should be made next Thursday, but today there is already a preliminary discussion about the budget gap. Chief economist Carsten Brzeski of ING Germany has a grim view: “The opposition is waiting for the government to collapse.”
There is a great danger that the German government will fall
The German budget currently suffers from a gap of 60 billion euros. This money initially had to be taken from the Coronavirus Recovery Fund and was earmarked for the Climate Fund. But the German Constitutional Court put an end to that, and now, according to Brzeski, many projects and subsidies are at risk of being cancelled.
Accounting creativity
He added: “The government has been trying for two years to hold on to the debt brake on the one hand, and invest a lot on the other hand. As a result, the German government is now without assets, especially after the court put an end to the plans, because accounting creativity is not permitted.”
“There is chaos and panic in the German government.”
Therefore, German Finance Minister Christian Lindner announced a spending freeze. “Just like in the United States, money is no longer coming in or going out,” Brzeski explains. There is chaos and panic in the government. It’s really a mess.
The opposition is sharpening the knives
Next Thursday, the Council of Ministers is scheduled to present plans to fill the gap in the budget. According to Brzeski, the opposition is sharpening its knives until then. He added: “After this decision by the court, they also want to consider other issues. But it is not as if the opposition itself is putting forward all kinds of alternatives.”
“It is very difficult to find a middle ground here.”
According to the economist, this crisis is likely to destroy the German government. This is because the Liberals absolutely do not want to see tax increases, while the Greens would also prefer their subsidies not to disappear. “It is very difficult to reach a compromise here, and therefore there is a great risk that the government will fall,” Brzeski fears.
“Lifelong zombie fanatic. Hardcore web practitioner. Thinker. Music expert. Unapologetic pop culture scholar.”