Germany: The economic crisis rises controversy over several Issues

German Chancellor Olaf Scholz said on Saturday that he was confident that his government would find a good solution to the budget crisis sparked by a court ruling last month, and his center-left party promised that there would be no dismantling of the balance sheet of the country’s welfare state concept.

Leaders of German three-party coalition have been in debate over funds since Germany’s highest court overturned a decision to reallocate 60 billion Euros ($65 billion) that were originally supposed to be used to mitigate the fallout of the Covid-19 pandemic in order to take measures to help fight coronavirus, climate change, and modernization of the country.

The immediate challenge is to fill a gap of 17 billion Euros in next year’s budget.

Scholz, Vice Chancellor Robert Habeck and Finance Minister Christian Lindner have met repeatedly to seek to resolve the impasse, but they no longer have time to pass the budget through parliament before the start of the new year.

The issue has heightened tensions within the two-year-old coalition, which has become notorious for infighting and has seen its popularity plummet in opinion polls.

The alliance brings together Scholz’s Social Democrats and Habeck’s environmentalist Greens, who also traditionally lean to the left, with Lindner’s pro-business Free Democrats.

Christian Lindner and his party portrayed themselves as guarantors of strong financing and adherence to Germany’s strict self-imposed limits on debt accumulation, rules that were the focus of the court’s ruling last month, and called for spending cuts.

On the same context, German Chancellor Olaf Scholz expressed his strong opposition to any reduction in social benefits, while his coalition, mired in a crisis, tries to agree on a budget for the year 2024.

Germany is experiencing a budget crisis after a court ruling last month led to the disruption of the government’s spending plans.

The debt ruling prompted the government to reassess its spending priorities and look for alternative ways to finance its plans or generate new savings.

Scholz said at the Social Democratic Party conference that the Constitutional Court ruling places a very difficult task on the government’s shoulders.

He stressed that he would not accept any reduction in social welfare, while seeking to reach an agreement with his two coalition partners, the Green Party and the liberal Free Democratic Party.

“In such a situation, there will be no reduction in the social welfare system in Germany,” he added.

The new budget crisis has exacerbated divisions between parties over the correct way to use the money and raised a question mark over Germany’s strict spending law.

The parliamentary group of the Social Democratic Party, led by Scholz, admitted earlier this week that it wouldn’t be possible for Parliament to approve the 2024 budget this year.

Scholz and his partners are still seeking to reach a political agreement by the end of the year, with the possibility of presenting it to Bundestag in early 2024.