Germany's economy shrank, and it's facing a spending crisis
German Chancellor Olaf Scholz has promised quick action to fix a budget crisis after a court decision blew a large hole in the almost-finished plan for next year
FRANKFURT, Germany — German Chancellor Olaf Scholz on Friday promised quick action to fix a budget crisis after a court decision blew a large hole in the almost-finished plan for next year and threatened to disrupt spending on efforts to fight climate change and cushion the impact of high energy prices caused by Russia's invasion of Ukraine.
“Some are asking whether the financial support from the federal government, which caps high energy prices, can keep flowing or must be paid back," he said in a video posted to X, formerly known as Twitter. «Those are “justifiable questions.”
Scholz said, however, that the government is “firm in our intention to modernize our country, so that in future, we have strong industry, good jobs and good pay when our economy is climate neutral.”
Scholz’s reassurances come as the budget crisis threatens to exacerbate problems in the world’s worst-performing major developed economy. Figures released Friday laid those issues bare.
Europe's largest economy contracted 0.1% in the July-to-September quarter as inflation eroded people's willingness to spend, Germany's statistics office said.
Germany is the only major economy expected to shrink this year, according to the International Monetary Fund, which foresees a decline of 0.5%.
Meanwhile, the closely watched Ifo institute survey of business optimism showed a tiny uptick to 87.3 for November from 86.9 in October but remained well below its July level, meaning business confidence is still in the dumps.
The country’s budget crisis raises the possibility of spending cuts next year, which
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