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Europe scoffs at German budget crisis: "One possibility would be to sell islands"

2023-12-03T14:19:23.729Z

Highlights: Europe scoffs at German budget crisis: "One possibility would be to sell islands" Germany spends much more money than its national budget justifies. The debt tricks of Berlin's governing coalition are not in accordance with the law, and the Karlsruhe ruling forces the traffic light to replan the budget. The German government wanted to cheat on the financing of the budget - this proved to be its undoing. The lessons with which local politicians met countries such as Greece, Italy or Spain when it comes to the restructuring of a crisis-ridden national budget.



Status: 03.12.2023, 14:43 PM

By: Patrick Freiwah

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The German government fails with a debt trick and gives Germany a new financial crisis. Abroad, the budget freeze is causing ridicule.

Berlin/Munich - Germany spends much more money than its national budget justifies. This realization has manifested itself in a dramatic way with the ruling of the Federal Constitutional Court. The debt tricks of Berlin's governing coalition are not in accordance with the law, and the Karlsruhe ruling forces the traffic light to replan the budget.

In view of the arrogance of German government ministers towards the former problem children of the European Union, the financial collapse of the Federal Republic of Germany from a former model pupil to a problem child has generated plenty of ridicule. The lessons with which local politicians met countries such as Greece, Italy or Spain when it comes to the restructuring of a crisis-ridden national budget are unforgettable.

Budget freeze plunges Germany into financial crisis - will islands be sold?

Former Greek Energy Minister Panagiotis Lafazanis did not miss the opportunity to give advice to Berlin's traffic light coalition – just as German Finance Minister Wolfgang Schäuble (CDU) once did in times of the Greek debt crisis. In addition to the introduction of an "emergency tax", it also mentions the sale of German islands. After all, the governing coalition at the time was not at a loss for similar proposals when Greece was struggling with the euro crisis.

The troika of international supervisors, who took crisis countries of the international community under their wing at the time, have also burned themselves into the memory of southern Europe - now a boomerang effect follows politically and in the media: Lafazanis is now also proposing a troika to get Germany's finances back under control in the wake of the budget freeze.

Germany's national budget: "Botched up almost borders on embezzlement"

Spain, too, was once a problem child of the EU - and is now in a better economic position. In the business newspaper Cinco Dias, a financial analyst assesses that Germany used to be "the prime example of the highest virtue in the field of budgetary discipline". But the picture has changed fundamentally: "A few days ago, we learned that the austerity was not only not as exemplary as it seemed, but that there was botching in exemplary Germany that almost bordered on embezzlement."

In France, according to Handelsblatt, it is more the press that engages in schadenfreude than politics. This is because it is working with the German government at the European level to reach an agreement on common rules for sovereign debt. The newspaper Le Monde writes: "The eurozone's most important economy finds itself in a budget deadlock because it is not following the strict rules it has set itself." The Berlin government must now look for a way out of the double standards with regard to state finances.

The German government wanted to cheat on the financing of the budget - this proved to be its undoing. © IMAGO/Christian Ohde

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Budget freeze in Germany: German "double whammy" in danger?

According to Handelsblatt, the "double whammy", which is a massive burden on the German treasury, is also viewed critically at the EU level: 200 billion euros to cushion the energy consequences of the Ukraine war seem like an unmanageable burden. In the rest of Europe, Germany was "eyed with suspicion" in view of this extent, because it distorts the EU single market and financially weaker states cannot keep up.

The duo of Olaf Scholz (Federal Chancellor) and Christian Lindner (Minister of Finance) replied that the German state budget had the necessary leeway for such a volume, due to a solid financial situation based on a healthy economy. However, after the decision of the Federal Constitutional Court (set in motion by the Union), these statements turn out to be a pipe dream. Thus, the new situation in the German budget changes the signs of the Economic Stabilization Fund (WSF).

In addition, there are not unjustified concerns that the German financial hole will affect other EU member states: EU Commission Vice-President Valdis Dombrovskis let it be known: "If Germany, as the largest economy, gets into economic or fiscal difficulties, this will have an impact on other EU states." However, some experts also doubt Germany's self-imposed debt limit in this regard.

Karlsruhe ruling on the national budget forces Germany to save money

Meanwhile, the Ministry of Economic Affairs expects the budget ruling to have noticeable consequences for the overall economic development in Germany. If 60 billion euros from the Climate and Transformation Fund and the loans from the WSF were not allowed to be used, the gross domestic product would grow up to 0.6 percentage points less, according to a simulation by the ministry, according to the German Press Agency (dpa).

However, the concrete effects are still unclear: After all, it is not yet clear which planned measures will be implemented financially despite the disastrous financial situation. Experts leave no doubt that the Karlsruhe ruling has far-reaching consequences, which are likely to have an impact not only on the climate fund – but also on other areas. (PF)

Source: merkur

All news articles on 2023-12-03

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