Economics Minister Robert Habeck fears that the Karlsruhe budget ruling will have a significantly greater impact on federal finances – and also on energy prices.
In his opinion, the verdict also endangers the Economic Stabilization Fund (WSF), from which the energy price brakes are paid, said the Green politician on Deutschlandfunk. “In the justification, the judgment, because it is so fundamental, actually refers to all funds that have been set up and that are over the year.”
This would also affect funds that have already been paid out this year. By the end of October, 31.2 billion euros had already flowed from the WSF. Specifically: 11.1 billion euros for the gas price brake and 11.6 billion for the electricity price brake, plus 4.8 billion for emergency natural gas aid and 3.7 billion euros in subsidies for network fees.
The energy price brakes were intended to mitigate the rapid rise in gas and electricity prices following the Russian attack on Ukraine. Aid was also planned for particularly affected companies. To this end, the special fund, which is economically independent of the core budget, was provided with loans amounting to 200 billion euros. Whether the funds will still be available next year is just as unclear as the question of whether the money should have been paid this year at all.
Higher electricity and possibly higher gas prices
“But that means in plain language that, at least for the future, the (fund) is supposed to last until the summer of 2024, citizens will receive higher electricity and possibly higher gas prices,” said Habeck. “If we get into a crisis, we will no longer be able to put the brakes on gas and electricity prices. Then we will have higher gas and electricity prices and district heating prices.”
A hearing with experts on Tuesday is expected to provide more clarity. Both the government and Union parliamentary group leader Friedrich Merz have announced that they will also have the economic stabilization fund checked for constitutionality. The Union wants to go to court again if necessary. Habeck emphasized that citizens could send letters of thanks to the Union for possible higher electricity prices.
Union rejects Habeck’s accusations
The opposition Union had sued in Karlsruhe against the reallocation of loans worth 60 billion euros in the federal budget. They were approved to deal with the Corona crisis, but were then supposed to be used for climate protection and the modernization of the economy. The Constitutional Court declared the traffic light government’s maneuver null and void: the money is now no longer available. The ruling could also have consequences for the handling of debt-financed special funds in general at the federal and state levels.
The Union rejected Habeck’s accusations. “It was only the failure of the traffic lights that led Germany to this situation; that was a constitutional violation,” said parliamentary group vice-president Jens Spahn. “This government has no control over its finances; it has been throwing money around like there is no tomorrow for two years.” Now it is the government’s job to set priorities.
The FDP brought cuts in social spending to plug the billion dollar hole. The traffic light coalition needs to talk about where the welfare state can make its contribution to budget consolidation, said FDP parliamentary group leader Christian Dürr of the Funke media group. Tax increases, on the other hand, are the wrong way to stimulate the economy and make Germany competitive again as a business location. Expenses for pension insurance and basic security are among the largest in the federal budget. The budget of the Federal Ministry of Labor and Social Affairs is more than 165 billion euros – more than a third of the total budget.
SPD parliamentary group deputy Sören Rix rejected the FDP proposal. “If the FDP now brings cuts to social benefits into play, it is not only playing with the cohesion in the coalition, but is also massively endangering democratic cohesion in our country.”
