Germany Freezes Public Spending in New Setback for Europe

BERLIN—Germany froze public spending for the rest of the year after a court declared the government’s spending plans unconstitutional, dealing a blow to Europe’s recovery and efforts to beef up its defenses and reduce carbon emissions.

The court decision is likely to widen the economic speed gap between Europe, whose economy has stagnated for over a year, and the U.S., which grew at an annualized 5% in the three months through September, turbocharged by massive fiscal stimulus.