Former German gov't coalition MPs file lawsuit against 500 bln euro climate and infrastructure fund

Several former members of the German parliament (Bundestag) from the pro-business Free Democrats (FDP) party are challenging the government’s debt-financed 500 billion euro special fund for infrastructure and climate neutrality, newspaper Die Zeit reported. 

The special fund, introduced in combination with a major military spending package, was made possible by a controversial reform of the country’s rigid constitutional debt brake - a balanced budget rule designed to restrict budget deficits at the federal level and limit the issuance of government debt. The reform that allows the fund to finance projects over the next decade also effectively removed limits on debt-financed military spending.

The former MPs describe the legal changes as a "de facto abolition of the debt brake". The plaintiffs argue that the changes imposed by the constitutional amendment "unilaterally shift the burden of current expenditures into the future". Furthermore, the budgetary autonomy of the Bundestag is now noticeably restricted, they argue. 

The complaint, filed on 24 March with the Federal Constitutional Court, challenges the constitutional reform that paved the way for the establishment of the special fund last year. In 2023, the constitutional court cited the debt brake when it declared 60 billion euro shifted into the country’s separate Climate and Transformation Fund as unlawful. The ruling followed on a lawsuit filed by the conservative Christian Democrats (CDU) of current chancellor Friedrich Merz.

The constitutional court's decision marked a key step in the collapse of the former government of the Social Democrats (SPD) of then-chancellor Olaf Scholz, the Green Party, and the FDP, with the latter objecting to reforms to the debt brake to release the funds needed for higher spending on climate action, infrastructure and defence. 

After the following snap election in early 2025, the FDP dropped out of parliament and the SPD entered into a new coalition government, this time as a junior partner to Merz's CDU, who had rejected a wider debt brake reform during its election campaign. In a first step following the election, the CDU/CSU and the SPD pushed the reform of the debt brake and the 500 billion euro special fund through parliament with support from the Green Party.

While labelled as a dedicated fund for investments in infrastructure and climate protection projects, the government has been repeatedly criticised for using it to plug budget gaps. The head of Germany's Court of Auditors (Bundesrechnungshof) in an interview with Süddeutsche Zeitung said the special fund currently served as a hub for redistributing funds from the core budget by covering expenses through the special fund.