Germany is on track for its first two-year recession since the early 2000s after its economy shrank in 2023 amid the impact of higher energy costs and weaker industrial demand.
The German national statistics office said “multiple crises” affecting the economy had contributed to a 0.3% fall in gross domestic product (GDP) in 2023, compared with the previous year, as higher interest rates and elevated living costs took their toll.
Germany’s highest court ruled on Wednesday that the government’s plan to repurpose tens of billions of euros from a pandemic fund to help finance environmental projects violated the nation’s Constitution. The decision threatens to rip a hole in the country’s budget and complicate its transition to a greener economy.
The ruling means that the government of Chancellor Olaf Scholz cannot shift 60 billion euros, about $64.6 billion, earmarked for tackling the Covid-19 pandemic into a special fund aimed at helping Germany meet ambitious goals to reduce carbon emissions.
