The KTF ruling and the subsequent budget freeze could particularly affect East Germany. At least that’s what the Ministry of Economic Affairs fears.
Munich – After the Federal Constitutional Court’s decision regarding the traffic light coalition’s supplementary budget, the government is increasingly finding itself in a crisis situation at the beginning of this week. In response to the ruling from Karlsruhe, Finance Minister Christian Lindner (FDP) issued a spending limit for parts of the federal budget on Monday evening (November 20th). What effects does this measure have on Germany as a business location? The Ministry of Economic Affairs, headed by Robert Habeck (Greens), fears far-reaching consequences, particularly in East Germany.
Budget freeze: Habeck State Secretary warns of consequences in the East after the Karlsruhe ruling
On Wednesday (November 15th), the Federal Constitutional Court judged the reallocation of 60 billion euros to the “Climate and Transformation Fund” (KTF) to be unconstitutional. The debt was originally taken out to deal with the Corona crisis.
For Michael Kellner (Greens), State Secretary in the Ministry of Economic Affairs, this is a step that could put a heavy burden on East Germany in particular. Of the 80 billion euros that were earmarked for investments in the economy, 50 billion euros were to be used for the east of the country alone, Kellner confirmed to the editorial network Germany (RND). “As things stand today, without the climate and transformation fund, neither the chip settlement in Dresden nor the chip settlement in Magdeburg and the reconstruction of the solar industry in East Germany are secured,” said Kellner.
Traffic light coalition in the budget crisis – worries about deals with Intel and TSMC
The State Secretary is referring to the planned branches of the chip giants Intel and TSMC in East Germany. The US company Intel plans to build a factory in Magdeburg to produce computer chips, which could create over 10,000 jobs in the region. For this purpose, the Nasdaq Group is to receive almost 9.9 billion euros in government funding. The Taiwanese group TSMC, on the other hand, is planning to build a semiconductor factory in Dresden. Several thousand jobs are expected to be created here too. The groundbreaking is scheduled for 2024. In Dresden, state funding is also expected to amount to several billion euros.
Two showcase projects for regions often neglected by previous federal governments. But it is precisely these that could now be in danger. “If we don’t support this transformation, then prosperity will come from somewhere else. That would be pretty crazy,” Kellner warned the RND.
Budget freeze in the federal government – SPD General Secretary Kühnert calls for new ideas
SPD General Secretary Kevin Kühnert also expressed concern about the impact of the ruling on the economy in the ARD morning magazine on Tuesday. The SPD politician emphasized that the expenditure planned in the KTF relates to securing Germany as a location. “Last Wednesday’s ruling hasn’t changed their necessity at all.” From the SPD’s point of view, it is therefore necessary to now find “other sources of income of whatever kind” in order to be able to continue making these expenses. “Otherwise we will lose in international competition.”
In this context, Kühnert did not rule out the possibility that the year 2023 might have to be declared an “emergency situation”. “These are exactly the things that need to be discussed now,” he told ARD. “If the SPD were to govern alone, then that would certainly be something we would do – and not out of trickery, but because the emergency is objectively present.” But this now needs to be discussed within the coalition.
The sticking point of the debt brake – the traffic light government could declare an emergency
The debt brake set out in the Basic Law can be temporarily lifted by the Bundestag if there is an emergency. If the traffic light coalition passes this decision with its majority in parliament, the government could incur new debt. The federal government is currently still examining the effects of the ruling, as government spokesman Steffen Hebestreit announced in Berlin on Monday. Before alternative financing options are discussed, it must first be clear how large the budget deficit is. (fd with afp)
This article was edited using machine assistance and carefully checked by editor Felix Durach before publication.
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