2021 €60 Billion Budget for Climate and Transformation Fund Declared Unconstitutional by German Constitutional Court

November 2023
Region: Europe

The German Constitutional Court has declared the Act on the Second Additional Federal Budget for 2021 , which was adopted by an act of Parliament in 2022, unconstitutional.

The act transferred credit authorizations of €60 billion from 2021 into the new Climate and Transformation Fund.

Previously in 2021, this €60 billion credit authorization had been included in a special fund for fighting the economic consequences of the COVID-19 crisis but were not used in respect of that crisis. The German Federal Constitutional Court held that such funds reserved in 2021 for the COVID-19 crisis could not be transferred to the 2022 budget for climate and energy transformation purposes by a simple act of Parliament. It is currently unclear whether and how such funds will be replaced, whether there will be tax increases or a cutting of other budget positions, or whether there will be another change to the German Constitution and a cut-back of the current debt ceiling contained in the German Constitution.