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German special assets in danger: Financial experts analyze panic in Berlin”
According to a report by finanzmarktwelt.de, the Federal Constitutional Court has banned the reallocation of a 60 billion euro credit line for Corona aid to a pot for climate measures. This leads to a significant hole in the federal budget and could also endanger other “special funds” of the federal government. According to Dr. Jörg Krämer, chief economist at Commerzbank, says the majority of the federal government's net borrowing comes from debt pots outside the regular budget. This means that other shadow households, known as special funds, could also be at risk. In fact, there are a total of 28 federal “special funds”, with the majority of the funds being financed by external sources. A particularly critical point is the “Energy Economic and Stabilization Fund” (WSF-Energy). …
German special assets in danger: Financial experts analyze panic in Berlin”
According to a report by finanzmarktwelt.de, the Federal Constitutional Court has banned the reallocation of a 60 billion euro credit line for Corona aid to a pot for climate measures. This leads to a significant hole in the federal budget and could also endanger other “special funds” of the federal government.
According to Dr. Jörg Krämer, chief economist at Commerzbank, says the majority of the federal government's net borrowing comes from debt pots outside the regular budget. This means that other shadow households, known as special funds, could also be at risk. In fact, there are a total of 28 federal “special funds”, with the majority of the funds being financed by external sources.
A particularly critical point is the “Energy Economic and Stabilization Fund” (WSF-Energy). This fund, which was originally provided with credit authorizations amounting to 200 billion euros, could also be in danger following the Federal Constitutional Court's ruling. The judges' criticism primarily concerns the calculation of the debt brake and the stockpiling of financial resources. If a corresponding lawsuit were to arise, the WSF's approach could be criticized.
The consequences could become visible in the financial years 2022 to 2024. Experts say tax increases or spending cuts may be necessary to plug the holes left by the ruling. This represents an enormous challenge for the federal government and could lead to tensions in the coalition.
Overall, the Federal Constitutional Court's ruling could have a significant impact on the financial sector and the market, as it endangers the state's financial stability. The uncertainty regarding the future of the “special funds” and the associated risks could lead to increased volatility on the financial markets. It remains to be seen how the federal government will respond to this challenge and what measures will be taken to plug the holes in the budget.
Read the source article at finanzmarktwelt.de