The German cabinet has agreed on a supplementary budget to see the country through to the end of 2023. All government spending on blue ribbon climate and industry projects had been frozen following a ruling by the country's highest court but a government spokesperson confirmed on Monday that a deal had been reached.

It will see the debt brake - a mechanism enshrined in Germany's constitution to limit the amount a government can borrow to 0.35 percent of GDP - suspended for a fourth year running. The government will take on $47.2 billion in new loans and make $16.5 billion in cuts.

The German government's finances have taken a battering over the last couple of weeks, since the Constitutional Court blasted a $65 billion hole in budgetary planning until 2027. Chancellor Olaf Scholz's government had planned to repurpose money borrowed by the German State to aid in the recovery from the COVID pandemic to green projects and industry subsidies. However, Germany's strict Government borrowing rules meant this was ruled unconstitutional.

There remains a split in the coalition over how to go forward with the debt break. Economy Minister and Vice Chancellor Robert Habeck said on Monday morning that he was open to a discussion over how to proceed with the self-imposed restrictions in the future. "The ball is now in the playing field where it should have been in the first place," said the Green Party man.

However, the more fiscally hawkish Free Democrats have been adamant that they do not want changes to the system. "We don't have a revenue problem," FDP parliamentary group leader Christian Duerr said. "The debt brake must remain."

This supplementary budget gets Germany through to the end of this year in five weeks' time. Last week, Chancellor Scholz said that he hoped the 2024 budget could be sorted out before parliament went on its Christmas and New Year break on Monday. 

The government spokesperson wouldn't be drawn as to exactly how things are going on the 2024 spending plan but said that the hope was that it could still be agreed this year. Time is running out to get that done, especially if it is to be achieved without a suspension of the debt break, which the FDP has ruled out.

If there is a complete breakdown, there could have to be elections in Germany, something which CSU opposition politician Markus Soeder was calling for on Monday. The leader of the State of Bavaria thinks Germans should get an early national vote next summer alongside EU Parliamentary elections. However, with his Christian Union currently leading the polls at 30 percent, one might reply 'He would say that, wouldn't he?'

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