After crisis, Germany approves 2023 supplementary budget

Germany has approved the 2023 supplementary budget, suspending a self-imposed cap on borrowing after a constitutional court ruling last month. The budget was approved with 392 votes in favor and 274 against in parliament’s lower house, and the upper house also passed the law on the supplementary budget with no objections.

The government justified the suspension of the debt brake, which limits net debt borrowing to 0.35% of GDP, by saying the war in Ukraine constituted an emergency situation.

The government has scrambled to find a way to accommodate the court ruling that blocked the transfer of unused funds from the pandemic to green investment, blowing a 60-billion-euro ($65.76-billion) hole in its finances.

The federal government exceeded the debt brake’s borrowing limit by 44.8 billion euros ($49 billion) with a planned new borrowing of 70.6 billion euros. 43.2 billion euros is allocated for energy price subsidies, while 1.6 billion will go to a flood relief fund in the Ahr valley. The government must suspend the debt brake for the fifth consecutive year or find 17 billion euros in savings and tax hikes after a remarkable court ruling.

Just two days after the 2024 budget deal, the government has already passed in both houses of parliament some resolutions that will take effect next year.