Juridical Tribune - Review of Comparative and International Law (Jun 2024)
The Impact of the Constitutional Court Ruling of 15 November 2023 on the Federal Government's Budget Planning and the Potential Increase in Insolvency Cases in Germany
Abstract
This study investigates the implications of the German Federal Constitutional Court’s ruling on November 15, 2023, declaring the second supplementary budget of 2021 unconstitutional, specifically the reallocation of unused COVID-19 debt authorisations for green initiatives. This landmark decision clarifies the exceptions to the debt brake and the handling of special funds, significantly affecting the climate and transformation fund, indirectly influencing other special funds aimed at stabilising the energy sector and rebuilding from the 2021 flood disaster. The research method involves a comprehensive review of legal documents, government reports, and financial data to assess the impact on Germany’s ability to fund its climate and energy transition policies, particularly through the climate and transformation fund and the broader implications for economic policy and insolvency rates. The main findings highlight the conflict between fiscal discipline, as mandated by the debt brake, and the government’s intention to finance environmental initiatives with unutilised COVID-19 debts. The ruling underscores the challenges of balancing fiscal restrictions with urgent environmental goals, questioning the flexibility of budgetary and tax policies to support significant investments in sustainability and climate protection. The conclusion calls for reevaluating how green agendas can be funded within stringent fiscal rules, emphasising the need for innovative financing solutions and a commitment to reconciling economic stability with ecological sustainability. This case study presents a critical analysis of the delicate balance between fiscal responsibility and achieving vital environmental objectives, urging rethink on financing green initiatives within the confines of fiscal and constitutional boundaries.
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