German Court Gives Nod to EU's €800 Billion Pandemic Fund




  • In Business
  • 2022-12-06 09:19:03Z
  • By Bloomberg
 

(Bloomberg) -- Germany's top court dismissed two cases challenging the country's approval of the European Union's €800 billion ($839 billion) pandemic recovery fund.

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The Federal Constitutional Court cleared the fund, dubbed "Next Generation EU," on Tuesday. The massive stimulus plan marked the crux of the region's economic response to the pandemic, consisting of grants and loans primarily for the worst-hit EU nations.

The program doesn't "blatantly transgress" the EU rules under which it was set up, Court Vice-President Doris Koenig said as she delivered the ruling. While there are "serious doubts" that the fund is in line with the bloc's treaty provisions, the concerns aren't grave enough to warrant the German court stepping in.

While the EU generally has no competence to raise debt, exceptions can be justified if they are temporary, limited and strictly targeted for a certain purpose. The amounts must be capped and may not exceed the EU's regular own resources, Koenig said.

Since the debt levels that can be raised under NGEU are "strictly earmarked from the outset" and limited to the goal to overcome the economic impact of the covid crisis, the EU's interpretation of its own rules can still pass as acceptable, she said.

(Updates with details of ruling from third paragraph)

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