Germany moves to suspend debt brake for 2023 to fix budget turmoil
By Holger Hansen and Kirsti Knolle
BERLIN (Reuters) -German Finance Minister Christian Lindner will propose a supplementary budget for this year which includes the suspension of limits on new borrowing, as he tries to ease a budgetary crisis caused by a court ruling last week.
The German government has in the last week scrambled to find a way to accommodate a constitutional court ruling which blocked the transfer of unused funds from the pandemic to green investment, blowing a 60 billion euro hole in its finances.
The ruling has prompted warnings about growth in Europe's biggest economy and strained the uneasy three-way coalition between Social Democrat Chancellor Scholz, Lindner of the pro-business Free Democrats (FDP) and the Greens.
«In consultation with the chancellor and the vice chancellor, I will present a supplementary budget for this year next week,» Lindner told reporters on Thursday.
«We will now put spending, especially for the power and gas price brakes, on a constitutionally secure footing,» he said, adding this required a supplementary budget.
A finance ministry spokesperson said the government would propose a lifting of the debt brake, which limits Germany's structural budget deficit to the equivalent of 0.35% of gross domestic product, by proposing to parliament an «emergency situation» for 2023.
A majority of lawmakers must agree.
The constitutionally-enshrined debt brake, introduced after the global financial crisis of 2008/09, was first suspended in 2020 to help the government support companies and health systems during the COVID-19 pandemic economic fallout.
Hawkish Lindner had been reluctant to suspend the debt brake mechanism as his party strongly advocates fiscal discipline.
Lindner said the
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