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Germany’s leader vows fixes for a budget crisis

FRANKFURT (AP) – German Chancellor Olaf Scholz vowed yesterday that his government will work “as fast as possible” to lay out how to solve a budget crisis, but he offered few details on how he would achieve his goals of promoting clean energy after a court decision struck down billions in funding.

With their economy struggling, Germany now is wrestling to fill the gaps in spending set aside for renewable energy projects and relief for companies and consumers facing high utility bills because of Russia-Ukraine conflict. Cuts could further slow what is already the world’s worst-performing major economy.

Germans “need clarity in unsettled times”, Scholz said in a speech to Parliament, adding that the government would not abandon any of its goals, which also include promoting investment in computer chip and battery factories for electric cars to modernise the economy.

He said it would be “a serious, an unforgivable mistake to neglect the modernisation of our country”.

A cap on consumers’ utility bills is no longer needed because energy prices have fallen, although the government would act if they rose again. “You’ll never walk alone,” Scholz said, quoting the song title in English.

Details on what could be cut for next year were lacking. On top of that, a long-term solution could take years, possibly until after the next national elections scheduled for 2025. That’s because the strict legal limits on borrowing cited in the November 15 court decision are enshrined in the country’s constitution, and a two-thirds majority in Parliament is required to soften them.

Germany’s constitutional court has voided some EUR60 billion in spending for this year and next. It said the government could not shift unused funding meant for COVID-19 relief to boost wind and solar projects, help with energy bills and encourage investment in computer chip production.

German Chancellor Olaf Scholz. PHOTO: AP