German coalition government delays decision on 2024 budget as court ruling effects still unclear

The parliamentary groups of Germany’s coalition government have postponed a decision on the 2024 federal budget, as the full extent of the consequences of a shock ruling by the constitutional court on budget policy remains unclear, reported Tagesspiegel Background. “Our aim is to discuss the budget swiftly but with due care in order to create planning certainty,” group leaders Rolf Mützenich (SPD), Britta Haßelmann and Katharina Dröge (both Greens), and Christian Dürr (FDP) said in a joint statement. A final meeting on next year’s budget would be postponed to enable the participants to “carefully consider” the court ruling. Tagesspiegel wrote that there is still a chance for parliament to agree the budget before the new year starts.

The constitutional court ruled on 15 November that reallocating 60 billion euros in credit authorities meant to tackle the consequences of the coronavirus pandemic into the Climate and Transformation Fund was unconstitutional. The government said it was analysing what consequences the ruling has for the past, current and future budgets, but the reasoning in the ruling means that there are very likely going to be effects on several other parts of Germany’s budget, such as the Economic Stabilisation Fund, which was used, for example, to cap electricity and gas prices. The ruling has increased already high tensions within the three-party coalition over how to finance the country’s transition to climate neutrality, with some members advocating for more subsidies, while others calling for stricter market-based instruments, such as carbon pricing.

Siegfried Russwurm, head of industry association BDI, called on the government to “quickly clarify the actual extent of the financial consequences of the ruling.” German industry is “extremely concerned about the current political situation,” Russwurm said, calling on the coalition partners to work together to find a solution. “There is an urgent need to examine whether the current concepts are still viable in all policy areas, especially in the transformation to climate neutrality,” he said.