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How Germany's budget crisis could affect you

James Jackson
James Jackson - [email protected]
How Germany's budget crisis could affect you
A woman takes several euro notes out of her wallet. Photo: picture alliance/dpa | Jonas Walzberg

Germany’s traffic-light coalition government are facing some tough choices after a blow to their budget, particularly on big projects to help make Germany’s economy more green. But how could some of these measures also affect ordinary people living in Germany?


With its ruling on the Climate and Transformation Fund or KTF, the Federal Constitutional Court overturned the federal government's budget planning.

The judges sitting in court at Karlsruhe decided last week that €60 billion - around a quarter of the country's national budget - that had been allocated to fight the Covid-19 pandemic but left unused could not be used for the KTF.

Though many of these measures are focused on industry, some could have an effect on your household budget too – or on future job prospects in these modern industries.

Rail renovations

Billions of euros were budgeted to renovate and upgrade the much-maligned Deutsche Bahn, with 4 billion set to be spent this year alone, reaching up to €12.5 billion by 2027. The Federal Transport Minister Volker Wissing (FDP) fears there will be a financial gap of €25 billion, with 40 sections of planned renovations already at risk.

READ ALSO: '2024 a turning point': When will Germany's rail network run on time?

Electric cars

Buying an electric car in Germany is often subsidised in an attempt to incentivise people to buy models that pollute less. But since last year these subsidies mostly came from the KTF – meaning that “E-Auto” drivers who had applied for these could be at risk of losing them, with the Ministry for the Economy warning that the decisive factor is whether your car is already registered or not.

Some might have already ordered their electric cars without registering yet, leaving them in funding limbo.


Energy prices

When Russia started its full-scale invasion of Ukraine in February 2021, the resulting energy crisis sent prices skyrocketing around Europe. Germany’s subsidies for consumers – known as the “double whammy” – were generous enough to worry other countries in Europe, spending €200 billion since the war began. Though this is funded separately from the KTF, it is possible that its funding will also be at risk.

Renewable energies such as wind power or solar power are another green measure that in recent years were financed by the KTF and will now be at risk. So if you are signed up to a green energy provider, your bills could go up if the government don’t find a solution.

READ ALSO: Germany freezes part of budget after court blow 


Investment in industrial areas

Much of the KMT funding was set to help transform Germany’s economy to make it fit for the future, spending four billion on microchip factories, particularly on sites in the east German cities of Magdeburg and Dresden as well as 31 other chip projects. Fifteen of these are guaranteed funding, but the rest might have to worry.

Green Steel was also set to be an industry for the future in Germany, with the government panning to invest billions in 35 companies such as decarbonising steel works in Saarland, Bremen and Eisenhüttenstadt. These three are now all at risk and only six projects are guaranteed funding.


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