A legal sword of Damocles hangs over Europe’s vast bond market

With the €750bn Recovery Fund, Europe’s leaders have unwittingly created a device to explode their own project

The German constitutional court has struck again. The fund that was supposed to save Europe is in suspended animation. 

If the European project ever unravels it will probably because of a ruling by the venerable Verfassungsgericht.

Each time its interventions become a greater threat. You can stretch the EU treaties and Germany’s Basic Law only so far.

The normal etiquette is for the judges to issue polite requests to the German president whenever required. This time they time issued an order. Their hackles are up.

The court was irritated by attempts to rush through German assent for the EU’s €750bn Recovery Fund, an instrument that allows the European Commission to raise serious money for the first time on the capital markets. It gives Brussels a giant slush fund to play with, and it changes the constitutional order.

The judges told him to withhold assent for the financing mechanism until they have reviewed a complaint by Germany’s tireless eurosceptic professors. The case could take months, possibly years. The final ruling may kill off plans to create federalist eurobonds by the back door. 

Read The Full Article At The Daily Telegraph