What the budget freeze means
A ruling by the Federal Constitutional Court tears a 60 billion euro hole in the budget plans of the traffic light government. The Federal Ministry of Finance reacts - and imposes a budget freeze for all departments. ntv.de provides an overview of what this is all about.
Why the budget freeze?
The trigger is a ruling by the Federal Constitutional Court. Last week, it declared the reallocation of 60 billion euros in loans in the 2021 budget null and void. The money was originally intended to mitigate the consequences of the coronavirus pandemic, but was then to be invested in climate protection measures. It is now missing from the Climate and Transformation Fund. As a result, the German government had already put certain projects that were to be financed from the fund on hold - temporarily.
What expenditure is affected?
The budget freeze relates to provisions in the current budget that will result in expenditure in future financial years. Specifically, the Federal Ministry of Finance is stopping commitment appropriations, i.e. the possibility of entering into payment obligations for the coming years. Among other things, this is intended to prevent a burden for the unresolved 2024 budget. According to Der Spiegel, the responsible State Secretary Werner Gatzer ordered in a circular that all available commitment appropriations in the individual plans 04 to 17 and 23 to 60 of the 2023 federal budget be blocked "with immediate effect". The individual plans relate to the individual budgets of the ministries. Section 60 refers to the Climate and Transformation Fund, for example.
What does this mean for the ministries?
Restrictions. For the time being, ministries can only make payments from the affected budgets in "special individual cases". According to Gatzer's letter, in future an application will have to be submitted to the Federal Ministry of Finance, in which ministries will have to justify their spending plans. It also states that a particularly strict standard will be applied to these in terms of proof of need. However, not everyone is affected by the freeze. Constitutional bodies such as the Bundestag, Bundesrat, Federal Constitutional Court and Federal President are exempt.
What happens next?
First of all, a group of experts will help the Bundestag and the Federal Government to interpret the budget ruling and provide an assessment of the current situation. To this end, the Budget Committee is hearing experts appointed by the various parliamentary groups today. The Federal Government is currently under pressure, particularly when it comes to planning the budget for 2024. It remains to be seen whether projects from the climate fund will have to be shifted to it. It is therefore questionable whether the budget can be adopted as planned next Thursday. This is mainly because it is unclear what will happen to the other special funds and projects, such as energy price brakes. Various experts also disagree on the budget situation for the coming year.
Economist Jens Südekum, for example, does not believe that next year's core budget will be directly affected by the Karlsruhe ruling. As long as a spending freeze is imposed on the climate and transformation fund, the 2024 budget can be adopted. Tax law expert Hanno Kube from the University of Heidelberg advises against a hasty decision on the 2024 budget. Finance expert Thiess Büttner from the University of Erlangen-Nuremberg sees a gap of at least 52 billion euros in the budget planning. "In order to present a constitutionally compliant budget, the Federal Government must review the planned use of all special funds without its own credit authorization, even beyond the special fund 'Climate and Transformation Fund'," he says in his statement.
What plans do the Ampel politicians have to plug the hole in the Climate and Transformation Fund?
None in common. SPD General Secretary Kevin Kühnert sees a budgetary emergency and is therefore calling for the debt brake to be suspended. He told ARD television that the SPD would implement this immediately if it were to govern alone. "Simply cutting 60 billion somewhere in the budget with a lawnmower, making social cuts, reversing the transformation of our society, no longer supporting companies in international competition and thus losing jobs in Germany, that is something the SPD was not elected for in 2021." He was also responding to FDP parliamentary group leader Christian Dürr, who spoke out in favor of social cuts in an interview with the Funke media group. Federal Economics Minister Robert Habeck called the FDP's demand a sign of helplessness. "Where do you want to cut 60 billion euros in social benefits? That dramatically misses the dramatic nature of the situation," he told AFP.
- In response to the ruling, the Federal Ministry of Finance, led by Finance Minister Christian Lindner, has imposed a budget freeze affecting all government departments, restricting their ability to make future expenditures from affected budgets, except in special individual cases.
- Amidst the budget crisis, the SPD's General Secretary, Kevin Kühnert, has advocated for suspending the debt brake and criticized the FDP's proposal for social cuts to address the 60 billion euro hole in the Climate and Transformation Fund.
- The Federal Ministry of Finance is now working closely with a group of experts to analyze the budget situation, assess the legal implications, and provide recommendations for the adoption of the 2024 budget, given the constraints imposed by the Federal Constitutional Court's ruling.
Source: www.ntv.de
