European Stability Mechanism and German Constitutional Court Ruling
Foreign and Commonwealth Affairs

David Lidington (Minister of State (Europe and NATO), Foreign and Commonwealth Office; Aylesbury, Conservative)

On 12 September the German constitutional court announced its decision not to grant temporary injunctions relating to the proposed ratification in Germany of the European stability mechanism (ESM) treaty, the fiscal compact and the decision amending article 136 of the treaty on the functioning of the European Union (TFEU). We welcome the court’s decision which will allow the German Government to proceed with its ratification of the ESM treaty and the article 136 amendment decision.

The court added caveats to its decision: first that the Bundestag must be fully involved in the relevant decisions and give formal approval to use of the ESM; secondly that there should be a ceiling for German liability of €190 million and that this cannot be increased without the Bundestag’s approval; and thirdly that the requirement of professional secrecy imposed on the members of the ESM should not prevent the Bundestag from being kept fully informed on ESM decision-making processes.

During the Committee stage of the EU (Approval of Treaty Amendment Decision) Bill I referenced the anticipated 12 September German constitutional court

decision, stating that it related only to whether the ESM treaty and the fiscal compact are compatible with the German constitution—10 September 2012, Hansard , column 63—to clarify this, the ruling was in relation to six separate cases brought before the constitutional court. These cases were directed primarily against the ESM, which, it was contended, would among other things jeopardise the constitutionally guaranteed right of the Bundestag to control the budget and the use of taxpayers’ money, and would turn a stability union into a transfer union. They also dealt with the fiscal compact and, in two of the cases, the decision amending article 136 TFEU to which the constitutional court gave the go-ahead to ratification without conditions.

The Government’s position on the ESM remains. The ESM alone will not solve the eurozone crisis, but will play an important role, providing the eurozone with a permanent financial assistance mechanism to assist eurozone member states in financial difficulty. And financial stability in the eurozone is crucial to our own economic recovery in the UK.