BERLIN (Reuters) -The German government must fill a “high double-digit billion” gap in the 2024 budget after a court ruling this month plunged the country’s finances into chaos, a politician from Chancellor Olaf Scholz’s Social Democrats said in Berlin on Wednesday.
Coalition party leaders are due to meet on Wednesday evening to thrash out a path to the 2024 budget. The size of the gap will determine whether it can be offset by savings or if the country’s debt brake must be suspended for another year.
There is no official figure for the budget gap in 2024 as consultations are still ongoing and the effects of the court ruling are still being examined in detail, a German finance ministry spokesperson said on Wednesday.
Finance Minister Christian Lindner and his Free Democrats (FDP) have spoken of a figure in the low double-digit range.
The SPD’s Katja Mast spoke out in favour of suspending the constitutionally enshrined debt brake, which limits a government structural budget deficit to 0.35% of gross domestic product.
“The SPD is convinced that a justification can be found” to declare an emergency situation, which would allow the brake to be suspended, she said, referring to the war in Ukraine and the subsequent costs for Germany, the transformation costs for a climate-neutral economy and maintaining social cohesion.
Mast said she expected the coalition committee to deal with the issue on Wednesday, but “the whole package will not be on the table by this evening.”
There is no date for the 2024 budget, a German government spokesperson said on Wednesday. It could be ready by Christmas or it would have to alternatively wait until January of next year.
According to German bank Berenberg, the government will cover a shortfall of roughly 30 billion euros to 40 billion euros($33-$44 billion) in 2024 compared with previous plans.
A total of 175 billion euros in spending for 2023 through to 2027 could be at stake following the court ruling, Berenberg said.
Germany’s constitutional court ruled on Nov. 15 that the coalition government’s decision to re-allocate 60 billion euros of unused debt from the pandemic era to its climate and transformation fund was unconstitutional.
The ruling is expected to heighten tensions in Scholz’s already fractious three-way coalition, which has seen support slump since taking office nearly two years ago as it tackles a series of crises, in part due to public infighting.
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(Reporting by Andreas Rinke and Maria MartinezWriting by Miranda Murray; Editing by Kim Coghill, Alexandra Hudson)
