Federal Constitutional Court ruling threatens the economy - financial expert warns of significant consequences and calls for alternative financing concepts.

Federal Constitutional Court ruling threatens the economy - financial expert warns of significant consequences and calls for alternative financing concepts.

According to a report by www.zeit.de, the Federal Constitutional Court's ruling could have a significant impact on the economy. The billions in billions of dollars in spending that are prohibited should not only support the climate, but also companies and households. The Institute for Macroeconomics and Economic Research (IMK) estimates that almost half a percent of growth could be lost in the coming year alone if government spending is cut.

Deutsche Bank previously expected growth of 0.3 percent in 2024, but IMK's forecast suggests the economy could contract again instead. The ruling forces Germany to adopt a financial policy that IMK and other industry experts believe is problematic.

According to calculations, around 18 billion euros would have to be saved next year as a result of the ruling. This would lead to cuts in climate action and other government spending, which in turn could hurt economic growth. According to the IMK, any reduction in government spending would reduce economic growth by the same amount, which could lead to further economic problems.

Politicians are now in a difficult position, as possible cuts in government spending or alternative financing concepts through higher taxes could further burden the German economy. There is the possibility of declaring an economic emergency and suspending the debt brake again, but this would be associated with uncertainty and renewed legal disputes. In addition, payments from the climate fund could be brought forward, but this would lead to budget holes in the future. These developments could also have an impact on the next federal government and the economy.