Germany is currently embroiled in a budget crisis following an emergency spending freeze. Euronews Business looks at why Europe's biggest economy is in trouble.
Germany's top court recently ruled against the reallocation of unused Covid-19 pandemic debt, totalling about €60 billion for climate and transformation projects, which has caused chaos for the country's budget with the government ordering a spending freeze on new expenditures, especially green initiatives, while trying to decide whether to abolish the debt brake or curb spending from elsewhere.
Previously, this amount had been kept aside to be used for renewable energy subsidies, energy-efficient housing, chips production and support measures for high-energy companies.
The ruling has thrown German Chancellor Olaf Scholz’s coalition government’s 2024 budget announcement plans on Friday into disarray. The impact could also extend to financial plans until 2027, as the government now has to make do with €60 billion less.