The German constitutional court in Karlsruhe has rejected the legal challenges brought by a politician and five academics with the aim of blocking Germany’s participation in packages that bail out other Euro-zone countries.

Although the landmark ruling does not make the previous bail outs illegal and also paves the way for future bail-outs it did say that the country’s parliament must have a greater say in any future rescue packages.

The constitutional court in Germany is the country’s most senior court and it has stipulated that the German government must get the approval of the parliament’s budget committee before any future rescue deal, which prevents the decision being used as some sort of ‘blank cheque’ and could lead to the slowing down of the process.

Another limiting requirement the court imposed was that the government must have ‘sufficient influence’ over the conditions of future bail-outs.

The court president, Andreas Voßkuhle, said that "The constitutional complaint has been rejected,"

"This was a very tight decision. But it should not be mistakenly interpreted as a constitutional blank cheque authorising further rescue measures,"

For the German Chancellor, Angela Merkel, this will presumably come as some good news in general terms as well as a bit of a victory. But although it vindicates her stance on the bail-outs it may tie her hands for future such emergency rescue packages by bogging them down in German legislative procedures. Something that will not be welcomed if the Euro-zone economy becomes even sourer.

The European Commission unsurprisingly welcomed the announcement saying "The commission has taken note with satisfaction of the constitutional court ruling on legality of the financial assistance for Greece and other measures".

Germany’s DAX responded positively by rising some 2.73% on the news.

Picture from HERE.

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