The court ruled the budget manoeuvre was incompatible with the debt restrictions enshrined in Germany's constitution.
The pressure is even more intense as talks for next year's budget are on the final stretch.
Highlighting the gravity of the situation, the government has already imposed a freeze on most new spending commitments on ministries.
"German industry is looking at the current political situation with the greatest concern," said Siegfried Russwurm, president of the BDI industry association.
One obstacle to reforming the debt brake, which restricts Germany's structural budget deficit to the equivalent of 0.35% of gross domestic product, has been Finance Minister Christian Lindner.
Persons:
Olaf Scholz, Christian Lindner, Robert Habeck, Chancellor Olaf Scholz's, Siegfried Russwurm, Holger Hansen, Christian Kraemer, Andreas Rinke, Madeline Chambers, Miranda Murray, Alex Richardson
Organizations:
Finance, Climate, Europe's, Social Democrat, Greens, Free Democrats, Fund, Reuters, Ukraine, Greens Economy, U.S, Intel, European, Thomson
Locations:
BERLIN, reallocating, Berlin, Ukraine