Germany's Scholz vows to modernise economy, back Ukraine, despite budget woes

German Chancellor Olaf Scholz, Finance Minister Christian Lindner, and Economy and Climate Minister Robert Habeck react, as Friedrich Merz, Christian Democratic Union party (CDU) leader speaks, on the day of a government declaration on the budget situation to the lower house of parliament Bundestag in Berlin, Germany, November 28, 2023. REUTERS/Lisi Niesner

BERLIN (Reuters) - Chancellor Olaf Scholz on Tuesday sought to reassure the German people and businesses that his government would modernise the economy and support vital industries such as chip factories, despite a court ruling that tore a hole in the federal budget.

A constitutional court ruling nearly two weeks ago blocked the government's plans to reallocate unused pandemic funds towards green initiatives and industry support, raising fears Germany's economy could be further weakened.