German government pauses plans for new spending

The German government has paused its plans for new spending as Chancellor Scholz's coalition struggles to resolve a deepening budget crisis, Reuters reports.

The German Finance Ministry has frozen spending prospects for almost the entire federal budget to emphasize the seriousness of the situation and its possible consequences for the country's financial stability.

Earlier, the court intervened in the government's budget plans, blocking the transfer of 60 billion euros of unused funds from the pandemic to "green" initiatives. This could lead to a lack of support for certain German industries and a loss of competitiveness.

The measures of the Ministry of Finance affected all departments and funds in the amount of 200 billion euros intended to support companies during the pandemic and the energy crisis caused by Russia's invasion of Ukraine.

The court's decision also increased tensions in the three-party coalition, where Scholz's Social Democrats and the pro-spending Greens are facing off against the conservative Free Democrats (FDP) over whether to suspend the limit on new debt.