Financial policy of the traffic light coalition: The government must now examine

After the climate fund ruling, it is unclear how the 60 billion gap will be filled. Economics Minister Habeck warns of consequences for industry.

Federal Economics Minister Robert Habeck (Greens) at a craft business in Cologne in July Photo: Bernd Weißbrod/dpa

BERLIN taz | Even just under a week after the Federal Constitutional Court’s ruling on the Climate and Transformation Fund (KTF), there is still a lack of clarity in the federal government about what consequences will follow. “We are working hard to examine the effects,” said a government spokesman in Berlin on Monday. “These are very complex questions that you can’t just shake out of your sleeve.”

Last Wednesday, the Karlsruhe constitutional judges decided that the government was not allowed to move loan authorizations for corona aid amounting to 60 billion euros to the KTF. The Union had sued. The KTF is the federal government’s central instrument for the modernization of the economy and society. Due to the decision of the constitutional judges, the fund is now missing more than a quarter of its resources.

The judgment is very fundamental. Therefore, the decision probably has consequences not only for the financing of the KTF, but also for the federal states that have set up loan-financed special funds. The Economic Stability Fund (WSF), through which the energy price brakes are financed, could also be affected.

Federal Economics Minister Robert Habeck (Greens) warns of the consequences of the ruling for industry. It is now about “the core substance of the German economy,” he told Deutschlandfunk.

Consequences for the Economic Stability Fund

In addition to measures to curb energy costs, the KTF’s projects include many classic industrial policy projects. These include promoting the establishment of the microelectronics factories Intel in Magdeburg and the Taiwanese TSMC in Dresden, hydrogen projects in the steel industry, for example, or funds for battery production.

Habeck is critical of Finance Minister Christian Lindner’s (FDP) demand to advance the modernization of industry with less public funding. “Modernizing with less public subsidies will lead to not modernizing,” he warned. Then there would be fewer Co2 emissions in Germany, but only because there would be less industry.

The decision in Karlsruhe can also have dire consequences for the WSF. Through the fund, the federal government is providing 200 billion euros to dampen the energy crisis, albeit financed by loans. According to the federal government, 31.2 billion euros had been used to finance energy price caps for citizens and companies by the end of October. It is unclear whether these funds should have flowed. The government is looking into this. The Union is also considering taking legal action against the WSF.

The climate and transformation fund is fed by income from the CO₂ price, which must be paid per tonne produced. This price will rise from 30 euros to 40 euros per ton on January 1st, and from 2025 it should be 50 euros. This will cause fuel and heating costs to rise significantly. Part of the financing gap could be filled by an even greater increase in the Co₂ price. Habeck sees this critically. This would have significant consequences for citizens, he warned.

To fill the gap that has arisen, the coalition has several options. It could suspend or reform the debt brake again or increase taxes. How the coalition parties will come together here is still unclear.

Debt brake reform

The SPD and the Greens have long been in favor of reforming the debt brake. SPD party leader Saskia Esken has now advocated not applying the debt brake in 2023 and 2024 due to an emergency. SPD party leader Lars Klingbeil also warned: The verdict “should not lead to us stopping modernizing our country.”

The FDP has already clearly rejected tax increases and is sticking to the debt brake principle. FDP parliamentary group leader Christian Dürr brought social cuts into play. The coalition needs to talk about where the welfare state can make its contribution to budget consolidation.

Jens Teutrine, spokesman for citizens’ money in the FDP parliamentary group, also sees it that way. “Social progress does not mean that the welfare state is becoming more and more expensive, but that it effectively helps those who really need support and that more people earn their own living,” he told the taz. Teutrine is convinced that the state has “sufficient financial resources” and that the welfare state is “not underfinanced”. The Liberals’ proposals are not surprising. Even before the ruling, the FDP had always argued against expanding social spending.