In November 2023, Germany’s constitutional court made a landmark ruling that had significant implications for the country’s budget and investment in green initiatives. The court ruled against the government’s plan to reallocate €60 billion in unused pandemic emergency funds to its Climate and Transformation Fund (KTF), deeming this move unconstitutional. This decision came at a critical time when Germany, Europe’s largest economy, was already facing an economic slow down.

Chart 1: Slow German economy hit by crushing court ruling

The German Schuldenbremse or “debt brake” is a fiscal rule…