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German court to rule in September on eurozone bailout fund

The federal judges' ruling will be scrutinised across the eurozone

The federal judges’ ruling will be scrutinised across the eurozone

Germany’s Constitutional Court will not give a ruling on the new eurozone bailout fund until 12 September, despite fears that delay could exacerbate the debt crisis.

The court’s announcement means weeks of nervousness for politicians and market traders, correspondents say.

German MPs have backed the European Stability Mechanism (ESM), but it has not yet been ratified.

Some politicians and entrepreneurs want to block the ESM’s introduction.

The court will also rule on 12 September on the fiscal treaty, which is aimed at forcing eurozone governments to adhere to strict budget discipline.

The petitioners against the new 500bn-euro (£404bn; $635bn) ESM and the fiscal treaty include the Left party (die Linke), the German association of family businesses and some leading economists.

President Joachim Gauck will let the court rule before he signs the ESM and fiscal treaty into law.

Last week Finance Minister Wolfgang Schaeuble warned the judges that delaying a ruling would carry economic risks.

The judges have previously ruled that the government must consult parliament more thoroughly before committing Germany to EU bailouts.

The new measures are fundamental to the 17-nation eurozone’s efforts to tackle the debt crisis and stabilise the euro.

The ESM was supposed to start operating this month, but there have been ratification delays in several countries.

Germany will account for 27% of contributions to the ESM, paying out 21.7bn euros in cash and providing guarantees worth a further 168.3bn euros. So German ratification is essential.

The ESM can start operating once member countries representing 90% of the fund’s capital commitments have ratified it.

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