The Karlsruhe-based constitutional court pressed pause of the approval process following an appeal against the legislation by a group of eurosceptics. Under the scheme for the €750 billion bailout, Brussels will be handed unprecedented borrowing and taxation powers in order to hand out cash to pandemic-stricken economies and regions. Before the recovery fund can enter into force, each of the EU’s national parliaments must first ratify the so-called “own resources” decision.
The Bundestag voted, with 478 of 645 MPs supporting the arrangements, to approve the multi-billion euro plan, of which Germany is a the main contributor.
The law, backed by politicians from Chancellor Angela Merkel’s coalition, was also passed by the Bundesrat, the upper house of parliament.
It was due to be signed into law by German president Frank Walter Steinmeier, but the German constitutional court moved to pause the process.
The court said it must first rule on a motion for an interim injunction on the law to approve the EU’s recovery fund.
A eurosceptic group, called the Citizen’s Will Alliance, brought the motion in an attempt to block its ratification.
The group argues the EU’s treaties do not allow the bloc to take on joint debt.
On its website, it said: “That didn’t prevent the European Council from passing an ‘own resources’ resolution which allows the EU to raise debt on capital markets for the first time.”
Bernd Lücke, a founding member of the eurosceptic Alternative for Germany, said he was “relieved” by the court’s ruling.
Now an economic professor at Hamburg University, he told the FT he is not opposed to the recovery fund but insisted the way it is being financed is “not in compliance with EU treaties”.
The €750 recovery fund will see the European Commission borrow the cash on international finance markets in order to distribute it as non-repayable grants and low-cost loans.
Professor Lucke said the move would “lead to EU fiscal union”, which would “violate the German constitution by limiting the budgetary powers of the Bundestag”.
Lucas Guttenberg, deputy director the federalist Jacque Delors Centre, said: “Experience suggests that they are quick to make a fuss but afraid to do anything that has actual operational consequences.
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“The experience we’ve had with similar challenges make me confident that the own resources resolution can be ratified soon,” he said.
The European Commission said: ““We note that the validity of the ‘own resources’ decision has not been put in question by the national court.
“The commission is confident that the German constitutional court will decide swiftly on the interim measures case.
“The EU objective remains to ensure the completion of the ratification process in all member states by the end of the second quarter of this year.”