German government reaches solution on budget crisis triggered by court ruling

BERLIN (AP) — The German government on Wednesday reached a solution to a budget crisis triggered by a court ruling last month, German news agency dpa reported.

The leaders of Chancellor Olaf Scholz’s three-party coalition had been wrangling over money since Germany’s highest court annulled a decision to repurpose 60 billion euros ($64.7 billion) originally meant to cushion the fallout from the COVID-19 pandemic for measures to help combat climate change and modernize the country.

The immediate challenge was to plug a 17 billion-euro hole in next year’s budget. Scholz, Vice Chancellor Robert Habeck and Finance Minister Christian Lindner had met repeatedly seeking to resolve the impasse before the end of the year.

Details on the content of the compromise and how the three leaders agreed to solve the budget crisis after negotiating all night were expected to be presented later Wednesday at a press conference by the three leaders, the chancellery said in a statement.

The issue has added to tensions in the 2-year-old coalition, which has become notorious for infighting and has seen its poll ratings slump. The alliance brings together Scholz’s Social Democrats and Habeck’s environmentalist Greens, who both traditionally lean to the left and had said there would be no dismantling of the country’s welfare state in order to save money.

Lindner’s pro-business Free Democrats have portrayed themselves as guarantors of solid finances and adherence to Germany’s strict self-imposed limits on running up debt — the rules at the center of last month’s court ruling — and have advocated spending cuts.