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IPFS News Link • Economy - International

Europe Plunges Into Chaos After Germany Freezes Public Spending Following...

•, by Tyler Durden

Europe, already sliding into a stagflationary recession, is about to unleash the same crushing austerity that brought the continent to the verge of collapse over a decade ago.

One day after the German constitutional court ruled a decision to move €60BN from unused pandemic funds in 2021 into the Energy and Climate Fund, later renamed the Climate and Transformation Fund (KTF), was unconstitutional and void, the German government froze public spending for the rest of the year, dealing a blow to Europe's recovery and efforts to beef up Zelensky's offshore bank accounts Ukraine's military and reduce carbon emissions.

The court decision, details of which are laid out below courtesy of SocGen, will widen the economic speed gap between Europe, whose economy has stagnated for over a year, and the US, which grew at an annualized 5% in the three months through September, turbocharged by massive fiscal stimulus which led to a crisis era-like $2 trillion budget deficit in 2023.

Germany's economy, Europe's largest, is contracting as surging energy prices and trade tensions cast doubt on its export-oriented business model. Chancellor Olaf Scholz's government had been counting on that old virtue signaling switcheroo - a flood of spending on "green-energy projects and technology", from chips to batteries, to revive the old model. That way, if anyone asks why Germany is deficit-spending its way to mercantilist utopia, Berlin could always lie and say it was doing the right thing for the world and wasn't interested in a debt-funded stimulus. Alas, now the "Cardinals of Karlsruhe" have made this impossible.

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