SNAPSHOTS

Where Is Germany's Budget Crisis Headed?

Dec 1, 2023 | 17:48 GMT

German Chancellor Olaf Scholz prepares to deliver a speech in parliament about the budget crisis on Nov. 28, 2023, as Interior Minister Nancy Faeser (left), Finance Minister Christian Lindner and Economy Minister Robert Habeck look on.
German Chancellor Olaf Scholz prepares to deliver a speech in parliament about the budget crisis on Nov. 28, 2023, as Interior Minister Nancy Faeser (left), Finance Minister Christian Lindner and Economy Minister Robert Habeck look on.

(TOBIAS SCHWARZ/AFP via Getty Images)

While the three members of Germany's coalition will likely reach a compromise to end the country's ongoing budget crisis, the upcoming complex negotiations over spending cuts could still collapse the government next year. On Nov. 14, Germany's Constitutional Court ruled that the federal government in Berlin cannot repurpose 60 billion euros in unused pandemic-related funds to finance policies related to the country's energy transition through 2027. This is forcing the three members of the ruling coalition -- which includes Chancellor Olaf Scholz's center-left Social Democratic Party (SPD), Economy Minister Robert Habeck's environmentalist Greens party and Finance Minister Christian Lindner's business-friendly Free Democratic Party (FDP) -- to make difficult choices about their spending priorities through the end of the government's term in 2025. On Nov. 27, the government unveiled a supplementary budget for the remainder of 2023 that temporarily lifts a constitutionally-enshrined debt brake (a self-imposed cap on government borrowing that...

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