Top German court tosses objection to EU coronavirus recovery fund

Business Wednesday 21/April/2021 17:47 PM
By: DW
Top German court tosses objection to EU coronavirus recovery fund
Photo: DW

Frankfurt: Germany's Constitutional Court gave the green light to approve legislation ratifying the European Union's recovery fund on Wednesday, as it dismissed legal challenges against the debt-financed investment plan.

The decision is key to launching the bloc's €750 billion ($900 billion) recovery spending to mitigate the consequences of the coronavirus pandemic.

"The drawbacks resulting from not approving the provisional measure and the law later turning out to be unconstitutional are smaller than the consequences of approving the measure and the constitutional challenge later turning out to be unfounded," the court said in a statement.

Ratification stopped in March
On March 26, the court stopped the ratification process by preventing President Frank-Walter Steinmeier from signing the relevant legislation, which had earlier been passed by both houses of parliament. The injunction was issued following an emergency appeal against the ratification initiated by the far-right Alternative for Germany (AfD) party and a group called the Citizens' Will Alliance.

The change that is to be ratified raises the upper limit for national contributions to the EU budget by 0.6 percentage points to 2.0% of gross national income until 2058 to safeguard the repayment of the recovery borrowing in case there is not enough money from taxes planned for that purpose. The court said seven out of the eight judges supported the decision.

Part of the package entails placing EU bonds in the market as joint EU debt. The European Commission can only launch the process once all 27 member states have ratified the measure.

The full package, which was agreed on in the summer of 2020, aims to facilitate access to €1.8 trillion in the bloc, until the end of 2027.

With the ruling, the court also threw out an urgent application for German participation in the fund to be declared unconstitutional. However, the ruling does not mark final approval in the case, as the court still has to make a definitive judgment.

A statement said a "summary examination" had not found a high likelihood of an infringement of the constitution.