“I want for Germany to take on a leading role,” said Federal Chancellor Olaf Scholz in his government statement, pointing out that the Federal Government would remain committed to its modernisation efforts and its infrastructure investments. Economic transformation, promoting the energy transition, overcoming the reform bottleneck: “I am committed to all of these goals. The Federal Government I have been leading has been working towards these goals from day one,” said Scholz in the Bundestag on Tuesday.

"You’ll never walk alone"

Regarding the current budget situation, the Federal Chancellor stressed: “You’ll never walk alone – I still stick to this promise I made last year.” At the end of the day, he explained, this was about the very fundamental issue of social cohesion in our country.

The central question was this, he said: “Is everyone left to fend for themselves when things get hard, or do we support one another? I have no doubt that all of us will do better if nobody is left behind. All of us will do better if we face the challenges side by side.”

Ruling of the Federal Constitutional Court

At the start of his speech, Scholz spoke about the ruling issued by the Federal Constitutional Court on 15 November 2023. The court found the second supplementary budget law from 2021 to be incompatible with the German constitution, the Basic Law. Scholz explained that, for the first time, the court had specified in great detail and depth how exactly the so-called debt limit provided for in the Basic Law has to be applied. Many aspects concerning the debt limit had lacked legal clarification in the past, and it had been against this backdrop that the Federal Government had made budgetary assessments two years ago, which were now judged differently by the Constitutional Court, Scholz continued. “The Federal Constitutional Court has therefore provided clarity, and the court has the final say in this. This is good democratic tradition,” the Federal Chancellor said.

The Federal Government would have chosen a different path had it known of the latest decision back in 2021, Scholz said, adding that this path had also been specified by the court in its ruling, which concerned the budgetary practice of the current government as well as those of the past and future. The Federal Chancellor reported that deliberations concerning the consequences of the ruling were still underway, pointing out that “diligence is more important than speed here”.

Support in times of crisis

Scholz expressed his belief that the ruling had created a new reality for all current and future Federal and Länder Governments. This reality was a more difficult one, in part due to the unexpected crises in recent years, he said, mentioning the coronavirus pandemic in December 2021, the start of the Russian war of aggression against Ukraine in February 2022 and the stop of Russian gas imports soon after. This had caused gas prices to increase more than tenfold, making the support measures extremely important at the time, Scholz continued. The Federal Chancellor gave a number of examples:

• 200 billion euros worth of benefits for citizens and companies that provided stability in a dramatic emergency situation.
• The far-reaching coronavirus-related aid measures that were in place for a number of years. It was thanks to these, he said, that Germany had made it through this once-in-a-century pandemic in better shape than many other countries.  
• The special fund for the Federal Armed Forces that is designed to strengthen them and improve their position over the next few years. Germany would continue to support Ukraine for as long as necessary, Scholz pointed out, saying that this was vitally important for Ukraine, and ultimately for all of us in Europe.
• Aid for the victims of the flood disaster in the Ahr Valley.

Exemption from the debt limit  

The Federal Chancellor announced that following the ruling of the Federal Constitutional Court, the aid for the Ahr Valley and the energy price brakes would be anchored in this year’s budget once again, and that the exemption clause of Article 115 of the Basic Law would be made use of in view of the debt limit.

The court had explicitly pointed this way in its ruling, confirming that the legislature had “a margin of assessment and discretion” in extraordinary emergency situations. A new rule, however, was that regarding aid in such emergency situations “the Bundestag now has the obligation but also the opportunity to come to a new decision every year,” Scholz explained.              

The Federal Government’s current approach

In his government statement, the Federal Chancellor also specified four concrete points of the Federal Government’s action in response to the Constitutional Court’s ruling:

• Any spending from the economic plan for the climate and transformation fund had been blocked with immediate effect, he said, with the exception of contractual obligations and energy efficiency measures. In addition, said Scholz, the reserve for the climate and transformation fund had been reduced by 60 billion euros in the 2023 supplementary budget.
• The Federal Government had taken precautions to prevent any new financial commitments for the next few years being entered into automatically, said Scholz. The Federal Chancellor pointed out explicitly that this did not affect any current expenditure, and that the state would continue to fulfil its duties. Scholz also addressed citizens directly: “The ruling of the Federal Constitutional Court does not affect your everyday life in the here and now, irrespective of whether you receive child benefit, a student grant, a pension or housing benefit.”
• It would be ensured, he said, that the current 2023 budget was in line with all provisions specified by the Federal Constitutional Court, and that included the supplementary budget and retroactive protection of the energy price brakes, as well as aid for the victims of the Ahr Valley flood. A removal of the energy price brakes at the start of next year was linked to price trends, Scholz said, adding that electricity and gas prices were available across Germany once again which were significantly higher than had been the case before the crisis, but still below the limits set for the price brakes.
• The Federal Government was working hard to make all decisions necessary for the 2024 budget as quickly as possible, Scholz pledged: “Our citizens and businesses need clarity in these turbulent times.  Citizens can trust the state to fulfil any promises it made.”

Modernising Germany

Federal Chancellor Scholz emphasised that support for Ukraine and for tackling the energy crisis could not falter. However, it would be a severe and unforgivable mistake to neglect the goal of modernising Germany amidst the current challenges, he said: “This modernisation is needed and the right thing to do. Without modernisation, Germany will not be able to effectively react to unexpected crises in the future.”

At the start of his government statement, the Federal Chancellor spoke about the current situation in Israel, as the Hamas terrorists had at long last released some hostages in recent days. Scholz said that it was impossible to even imagine what the hostages, their families and friends had gone through over the past few weeks: “So I am all the happier and more relieved to hear that they are now free and safe. The fact that there were a number of Germans among those released is also a great relief.” The Federal Chancellor thanked all those who had taken action to free the hostages, and went on to say that the Federal Government would continue to make a case for the release of the other more than 100 people who are still held hostage by Hamas.