Olof Scholz has a large (and unexpected) political problem
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If there was one thing Southern European debtor countries got used to during the sovereign debt crisis, it was German politicians telling them no. Now, the German government, led by chancellor Olof Scholz (pictured below), may soon be put in a situation where austerity is the only way out. The reason is that the German constitutional court recently announced that the Scholz government’s plan to fund its ambitious program with funds existing outside of the main budget violated the rule that Germany’s budget deficits should not exceed 0.35% of its GDP. This makes it very reasonable to expect cuts to public budgets.