The German court rejects the appeal against the EU fund

LONDON – The German Constitutional Court decided on Wednesday to reject legal appeals against the EU’s recovery plan, effectively paving the way for unprecedented stimulus to be launched across the region.

Germany’s highest court had raised questions in late March about the EU’s plan to raise € 750 billion ($ 900 billion) in financial markets to fund projects across the bloc and thus reduce the economic shock of the crisis. Covid-19.

The measure curved the much-needed stimulus and came after a group of Eurosceptic citizens expressed concern that additional borrowing could become a permanent feature in EU policy-making.

“Limits apply to the volume, duration and purpose of loans for which the European Commission is authorized, as well as to possible debts incurred by Germany,” the constitutional court said in its opinion on Wednesday.

“Moreover, the funds in question will be used exclusively to address the consequences of the Covid-19 crisis,” the court added.

The German court’s statement emphasizes that the decision of the 27 heads of state in July is temporary. This detail is particularly important for Euro-skeptics, who tend to be concerned about too much integration between the 27 EU Member States.

Wednesday’s decision allows Germany to complete the necessary legislative measures before payments take place later this year. As of last week, Austria, Germany, Estonia, Finland, Hungary, Ireland, Lithuania, the Netherlands, Poland and Romania have not yet completed national procedures before the European Commission can effectively exploit the markets.

A European official, who did not want to be named due to the sensitivity of the process, told CNBC on Monday that, if all goes well, the first disbursements could take place in July.

Speaking to CNBC last week, Austrian Finance Minister Gernot BlümeI said: “I am convinced that there will be no delay in being able to issue those European bonds as well.”

Funding is particularly important for European nations that want to boost their economies after the pandemic. Although vaccination rates are rising throughout the bloc, some countries are still blocked or severely restricted behind a third wave of infections.

The euro continued to trade slightly lower against the US dollar after the announcement, and the 10-year Greek government bond fluctuated around the flat line.