German government unveils budget fixes as way out of crisis
By Christian Kraemer
BERLIN (Reuters) — Germany's ruling coalition unveiled a supplementary budget on Monday that will temporarily lift a self-imposed cap on borrowing after a constitutional court ruling tore up the government's spending plans.
The budget, which parliament must approve, will see Germany suspend its constitutionally enshrined debt brake for a fourth year in a row to borrow roughly an extra 45 billion euros ($49 billion) as Chancellor Olaf Scholz's government fights its way out of a crisis that has triggered warnings about growth and an industry exodus.
Berlin was forced to freeze most new spending commitments after the court blocked plans to re-purpose billions of euros of unused pandemic funds towards green projects and industry subsidies.
It will suspend the debt brake for the 2023 budget to allow higher borrowing prompted by the court's ruling, before finalising a 2024 budget that could see cuts in some ministries in order to keep spending commitments elsewhere.
The brake sets a limit on new borrowing, though it can be exceeded in «exceptional» circumstances.
Friedrich Merz, who leads the resurgent opposition Christian Democratic Union party that launched the initial lawsuit before the constitutional court, warned that fresh legal action was possible should the government seek to suspend the debt brake for next year's budget, too.
«We have no confidence,» he said.
The government said the spillover effects from the energy crisis that hit in 2022 after Russia's invasion of Ukraine and caused rocketing prices had created an emergency situation that justified suspending the debt brake.
«There was and is a risk that falling household consumption could trigger a downwards spiral in the German economy,
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