Helena Lyng Blak
10 weeks ago

Geopolitical analyst: Germany may hinder green transition of Europe

The analyst believes that the German “debt brake” could leave Germany at the bottom of the leaderboard in the race towards fiscal deficits.
euro coin with national flag of germany on the euro money banknotes background
esfera / Shutterstock.com

In November 2023, Germany's supreme court issued a pivotal decision impacting the nation's finances and environmental investments.

It found the government's strategy to redirect €60 billion of unspent pandemic relief money into the Climate and Transformation Fund (KTF) to be against the constitution. 

This verdict arrived during a crucial period of economic deceleration for Germany, the leading economy in Europe.

“The German Schuldenbremse or 'debt brake' is a fiscal rule embedded in the country’s constitution that limits the federal government’s structural deficit to 0.35% of GDP with some flexibility allowed in extraordinary emergencies like natural disasters or severe economic downturns,” geopolitical analyst Anne Sandager explains to Steno Research. “It was this exception clause which was used during the Covid-19 pandemic to let Germany’s public debt run lose.”

With the court’s recent ruling, however, concerns are rising about Germany’s ability to supply weapons to Ukraine as well as finance investments that may prove critical to the country’s economic growth and advancement, especially in within green technology.

“Something’s gotta give,” Sandager asserts. “Climate/public investments or the debt brake.”

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