Welcome to the Eurointelligence podcast. I'm Wolfgang Munchau and with me are Zuzanamunshank and Jack Smith.

Today we would like to talk about Germany, the German deadbreak, and especially the European aspect of this story, which is hardly ever discussed, both in Germany and elsewhere.

In Germany, it's not discussed at all. It's all about whether it's a good thing or not to have the debt break, whether we should try to fiddle our way around it again,

or whether we should reform the debt break. Debates on fiscal policy in all countries in Europe,

always domestic. And Germany is no exception here. So let me make a short introduction to what

happened there. The Constitutional Court a couple of weeks ago gave a ruling to say that the German budget or aspects of the German budget have been unconstitutional. This related to a couple of off-budget funds which the coalition changed when it got into power. There was one of the funds which were already there,

it's called the Climate Transformation Fund and what they did, they put extra money from a previous,

completely legal, by the way, completely legal COVID fund. They put the unspent money from that

fund into the Climate Transition Fund, so bolstered it to 210 billion euros. And they also introduced an economic stabilization fund

through which they would pay things like help for flood victims. There was a big flood disaster

in the R region a couple of years ago. This is the kind of thing they would pay money, but also

other subsidies for energy prices. for example, and Putin invaded

Ukraine. The energy price subsidy that was paid to households was paid from this fund. So these

things were not in the normal budget. The constitutional court said these off-budget items in the

way they were done in Germany are unconstitutional. They were used really as a way

around the debt break. Everybody saw it that way, including the people who don't like the

debt break, were quite eager to use these off-budget funds, so they had it both way. They could

pretend they would stick to the debt break and yet not stick to the debt break because it would

give them some money.

Now, the Constitution Court put an end to this and created really a government crisis.

This is a political crisis because this is not only a government that hasn't.

A government without a budget isn't a government.

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