Heading for budgetary brake-down?!

Photo by serjan midili on Unsplash

Dear Reader,

Another week, another crisis.

This time it’s the turn of Germany’s state finances. In my latest newsletter for members I went into the backstory of why Olaf Scholz set up an enormous shadow budget to finance his government’s climate policies - and how a dramatic ruling by the constitutional court has brought that house of cards crashing down. 

The court ruling - that €60 billion transferred into a climate fund from an older pandemic fund breached three separate constitutional principles - has created a vortex at the centre of German politics, with all kinds of spending pledges at risk of being sucked in.

Indeed, the wording of the ruling makes it likely that a whole host of shadow budgets set up by Scholz and his finance minister, Christian Lindner, could be affected. The total damage? well over €200 billion.

To give you some idea of just how significant this is, the regular federal budget for this year was around €460 billion. In other words,…