Overview

• Germany's constitutional court has ruled that the government cannot reallocate unused debt from the Covid-19 pandemic to current spending plans, causing a budget crisis.
• The ruling has left a €60 billion hole in the budget, freezing spending across all ministries.
• Finance Minister Christian Lindner announced a plan to adopt a special budget to cover the cost of energy subsidies, aiming to put expenditure on a constitutionally secure footing.
• The German economy is expected to contract in 2023 due to flagging industrial production and high inflation.
• The budget crisis could potentially endanger the future of Berlin's coalition government.