Gov't Spox-Court Ruling On KTF Has 'Far-Reaching Effects' Beyond Budget

Wires carrying comments from a spox for the German gov't regarding the 15 Nov Constitutional Court rulingthat stated that the gov'ts EUR60bn off-budget Climate Transformation Fund (KTF) was unconstitutional. Spox: 'Court decision has far-reaching effects beyond 2024 budget." Spox: 'Reviewing court decision will take some time, as will new plans for climate fund.' Spox: 'Think that state gov'ts must also review court decision's effects.'

• Earlier, Reuters reported that "According to initial rough estimates, a loss of investment funds could cause growth in 2024 to be about half a percentage point lower," the source, who is familiar with the economy ministry's forecasts, said."
• While the gov't remains in an unstable place, there are factors the could keep the coalition together. Namely, the slump in polling support for all three parties involved; the Social Democrats, Greens, and Free Democrats.
• A collapse of the gov't would leave two options on the table: the formation of a 'grand coalition' with the conservative Christian Democratic Union (CDU) or snap elections. The CDU holds a wide lead in polls and therefore would likely not be inclined to take the junior position in a grand coalition, making a snap election the most likely outcome.
• While Finance Minister Christian Lindner's Free Democrats have been seen as the most likely to pull the plugon the gov't, the party is polling perilously close to the 5% electoral threshold, and as such may not wish to bring about a snap election that could see it lose all of its seats in the Bundestag.