Budget ruling by the Federal Constitutional Court and implications for eastern Germany

According to Michael Kellner (Greens), Parliamentary State Secretary in the Federal Ministry for Economic Affairs, the budget ruling by the Federal Constitutional Court will hit East Germany particularly hard. Kellner told the Redaktionsnetzwerk Deutschland (RND/Tuesday) that if the missing 60 billion euros for the climate and transformation fund are not raised from other sources, the East German economy will suffer considerable damage.

Out of the announced investment in German industry of 80 billion euros, around 50 billion will be allocated to East Germany, Kellner said. "We now face the huge challenge of securing these investments and the associated jobs and prosperity through state support." Kellner emphasized that without the climate and transformation fund, neither the establishment of the chip factories in Dresden and Magdeburg nor the reconstruction of the solar industry in eastern Germany would be secured.

FDP finance and budget expert Frank Schäffler is calling for the subsidies for the chip factories in Magdeburg and Dresden to be waived. "It has always been wrong to invest billions in subsidies for the establishment of chip factories," Schäffler told RND. Schäffler did not accept the argument of subsidies in disadvantaged regions, according to RND: The planned locations of the chip factories, Magdeburg and Dresden, are not structurally weak areas. "On the contrary: there is a shortage of labor there," said the FDP politician. "And the construction of the chip factories would mean that medium-sized local companies would lose out."

DIW expert Claudia Kemfert believes that the suspension of the debt brake is justified by a ruling by the Federal Constitutional Court in 2021. According to a report by "Mediengruppe Bayern", she recommends a triad to realize the transformation in Germany: "First: Cut spending in non-future areas. Secondly, put unnecessary climate and transformation fund spending to the test. Thirdly, suspend the debt brake."

The Federal Constitutional Court itself provided sufficient justification for this in its 2021 ruling by naming climate protection as the central task of the state, said Kemfert. In view of the climate crisis and the economic transformation, Germany urgently needs future investments in electromobility, rail transport, digitalization, storage or building energy.