The German government will not be able to cope without a budget deficit. This is the view in an interview with Bloomberg TV. expressed German economist Clemens Fuest has been president of the Ifo Institute for Economic Research and director of the Center for Economic Research at the University of Munich since 2016.
“The ruling coalition may reconsider subsidy plans and increase carbon taxes to soften the impact of last week’s Constitutional Court decision. But it is not possible to provide all the necessary financing through subsidy cuts and tax increases alone,” Fuest said.
The economist explained that Germany really needs a budget deficit if local governments really plan to meet their investment and climate targets.
The German Constitutional Court ruled on November 15 that the country’s government did not have the right to transfer the 60 billion euros allocated to combat the pandemic several years ago to the climate change fund. The German government has already announced that it has begun restricting many programs whose money must come from this fund. According to local media reports, the court decision will lead to a significant gap in the KTF budget, which is planned to invest more than 210 billion Euros in the modernization of infrastructure and industry, as well as green energy, in the coming years. Among other things, these funds will support alternative energy sources and infrastructure for electric vehicles, modernization of railways, semiconductor production, etc. would be used to support it.
Previously Deripaska named Threat to the German economy.