/dpa
Berlin – The federal government wants to officially launch its hotly contested budget for 2025 tomorrow – although it is not yet entirely clear how a billion-dollar hole can be plugged. If that doesn’t work, it may have to renegotiate again.
First, a decision is expected in the cabinet tomorrow. The draft budget will then go to the Bundestag, where it can still be amended and is expected to be approved shortly before the end of the year.
For weeks, Chancellor Olaf Scholz (SPD), Vice Chancellor Robert Habeck (Greens) and Finance Minister Christian Lindner (FDP) sat together for hours in the Chancellery. They are said to have literally turned over every stone in the budget to plug a funding gap of more than 30 billion euros.
A task that state secretaries normally undertake with this level of detail – and which shows how serious the traffic light coalition is in the meantime. At the beginning of July, the basic agreement was reached after a marathon of meetings.
For this year, the federal government is giving itself a little more freedom with a supplementary budget. Given that the economy is so sluggish, it is allowed to take on 11.3 billion euros more debt than previously thought. This should be exploited. This increases the debt burden for 2024 to 50.3 billion euros, according to figures from the Ministry of Finance (BMF) Show.
Most of the money will go to the so-called climate and transformation fund, which, among other things, will be used to pay for the promotion of green electricity. It also compensates for the fact that citizens are in greater need of money due to the poor economic situation and lower tax revenues. The supplementary budget is expected to be approved by the Bundestag at the beginning of November.
The budget for next year should ideally be approved by the Bundestag in November. But the coalition still has a lot of work to do here – because there is still a billion-dollar hole. It is common for the government to plan a so-called overall spending cut. It is betting that the end result will be that the ministries will not actually be able to spend all the money budgeted. But this time the calculated gap is particularly high, at 17 billion euros.
The federal government already has ideas on how to raise 8 of the 17 billion euros – but it is not yet clear whether these will be constitutionally and economically viable. Among other things, it is examining whether billions of dollars in subsidies to the railways and the bus company can be replaced by loans. This means that the money would not count towards the debt brake. If the tests are negative, the traffic light coalition may have to discuss savings measures again.
This year’s budget negotiations have already been extraordinarily difficult. Ultimately, Scholz, Habeck and Lindner agreed to adhere to the debt brake anchored in the Basic Law – a one-off victory for the FDP, but the SPD in the Bundestag has not yet completely given up on the idea of making an exception because of the financial burden caused by the war in Ukraine.
Above all, cuts had to be made Ministry of Foreign Affairsthe Ministry of Economic Affairs (BMWK) and the Ministry of Development (BMZ) accept. On the other hand, there was an increase for the defence department, among other things – although at 1.25 billion it was not as significant as Minister Boris Pistorius had wanted. Overall, the draft budget foresees a new debt of 43.8 billion euros, which means that the scope of the debt brake will be fully exploited.
In the years after 2025, the Finance Ministry says, budget negotiations could cause even more problems. Lindner’s department warns of a “relatively high level of budget petrification.”
A lot of money is already tied up due to the legal rights of the population, the increase in social spending in an ageing society and the quotas that have to be met, such as defence spending.
Social expenditure, interest and personnel already account for 62 percent of the federal budget – money that can no longer be used flexibly. In the financial planning for the years 2026 to 2028, there is a financing gap totaling 65 billion euros.
A package is intended to help make the German economy competitive again and, for example, also to generate tax revenues. The key points on this issue are also to be decided tomorrow. It is not just about accelerating the depreciation of corporate investments and cutting red tape.
Workers should be given incentives to work harder and longer – for example, by granting employers of unemployment insurance and, in some cases, pension insurance contributions to workers of retirement age. A tax break is planned for skilled foreign workers for the first three years of employment in Germany.
The government also wants to make overtime hours beyond collectively agreed full-time work tax and contribution-free. Families should receive a higher immediate child benefit and more child benefit. In addition, subsidies and other limits on wage and income taxes should be adjusted so that citizens can save €23 billion in taxes over two years. © dpa/aerzteblatt.de