German Government Turns Down Proposal for Economic Stability Program

The German government has stopped spending from the economic stabilisation fund for the year after a constitutional court ruling last week, according to a source close to the finance ministry. The ruling prohibited the transfer of 60 billion euros in unused funds from the pandemic to green projects.

The government is currently working on a response to the court ruling, as Werner Gatzer, state secretary at the finance ministry, stated in a letter on Tuesday that credit authorisations for the economic stabilisation fund can no longer be used in 2023 under the current legal situation. All spending that has not been used in 2023 is now blocked and requires the consent of the finance ministry.

The budget committee had previously been able to give approval for such spending, but payments related to this year’s energy price brake are not affected by this ruling. Handelsblatt business daily was first to report on this decision to block spending from the ESF for 2023.

The government is working to address the implications of this court ruling and blocked spending from the economic stabilisation fund for 2023. According to our source, payments related to this year’s energy price brake are not affected by it. The economic stabilisation fund, initially created to support companies during the pandemic, has since shifted its focus towards addressing the energy crisis.