The traffic light coalition is looking for a way out of the budget crisis

Chancellor Scholz invited people to the top meeting after the budget verdict. The traffic lights dampened expectations in advance – and so there were no decisions. The government is facing a major effort.

Berlin – The federal government is looking for a way out of the budget crisis. It has to plug a hole of 17 billion euros in the 2024 federal budget. Federal Finance Minister Christian Lindner (FDP) announced this sum on ZDF in the evening shortly before the start of discussions between the coalition leaders.

A decision must now be made quickly and carefully, said Lindner. “But the state is fully capable of acting.” What must be achieved is that the state handles the money it has “more accurately.”

The meeting in the Chancellery ended after just under an hour and a half, as the German Press Agency learned from coalition circles. There was a good political exchange. All three partners agreed that they wanted to find good solutions in the interests of citizens and companies. No decisions were expected during the deliberations.

Scholz optimistic before the meeting

Before the meeting, Chancellor Olaf Scholz (SPD) was optimistic that future investments would be possible despite the budget crisis. “Yes, we will continue to invest in the future,” he assured. Germany has to have the courage to do this, also because other countries such as the USA and China work with high subsidies.

Despite different positions, the coalition continues to aim to approve the budget for 2024 before the end of the year if possible. “It would be nice, the goal would be, it would be wonderful to do it this year,” said government spokesman Steffen Hebestreit in Berlin. All three coalition partners want an early conclusion.

However, decisions must be made on the core concerns of all three traffic light parties. Lindner has therefore already prepared his colleagues for “considerable physical exertion”.

Klingbeil does not yet expect a final solution

SPD leader Lars Klingbeil also does not expect a final solution for the 2024 budget. “The situation is too great for that,” he said on the RTL and n-tv program “ Frühstart ”. But he hopes that the first corridors of solutions are emerging. CDU leader Friedrich Merz advised the federal government in a “Welt” interview not to rush through the budget resolution for the coming year.

Formally, the coalition committee had been scheduled for a long time. The Federal Constitutional Court had banned billions in Corona loans from being subsequently used for climate protection and modernizing the economy and from setting aside emergency loans for later years. The coalition partners disagree about the consequences.

Problem 1: Intel billions, heating subsidies – what’s going on in the climate and transformation fund?

Since the verdict, the federal government has been missing 60 billion euros that had already been earmarked for investments over the next four years. This should, among other things, finance funding for Intel and TSMC chip factories, for the replacement of old oil and gas heating systems, the renovation of the railway and many other projects.

Legally binding funds can flow in 2024 even without the 60 billion because the fund has its own income and enough money. One thing is also certain: heating subsidies should not be cut for the time being. But what about the rest? The projects affect the “economic core of Germany,” warns Economics Minister Robert Habeck (Greens). The Union proposes to reverse the heating subsidy. One possibility would also be to generate more revenue through tax increases, which the FDP categorically rejects.

Problem 2: Billion hole in the 2024 budget

The verdict also tore a billion-dollar hole in the budget for 2024. Lindner said on ZDF: “For the 2024 budget, I now assume that around 17 billion euros will be required for action.” SPD General Secretary Kevin Kühnert therefore believes that the debt brake is unavoidable to suspend again. The coalition also plans to repair the 2023 budget – because the energy crisis was still clearly noticeable at the beginning of the year. Kühnert said on Deutschlandfunk that the hole in the budget could not be filled “through mere savings in the core budget and in the federal government’s investment projects.” The previous savings proposals would not do justice to the magnitude.

Exceptions to the debt brake are possible in the event of natural disasters or exceptional emergency situations. This has been used in recent years because of the corona pandemic and the consequences of the Russian war of aggression against Ukraine.

The FDP currently sees no basis for a new emergency resolution. Scholz has announced that he will set priorities and “of course also limit expenses”. The energy price brakes, among other things, are to be removed from the turn of the year, but more remains to be seen. The Greens want to get subsidies that they believe are harmful to the climate, such as tax breaks for company cars. The Union also already has a strike list. On it: citizen’s benefit, basic child security, social benefits. The SPD and the Greens reject this.

Problem 3: Fundamental decision on the debt brake

Immediately after the Karlsruhe ruling, a debate broke out about the future of the debt brake. Many SPD and Green politicians are calling for a reform so that the state can take out more loans for important investments. Then future projects would no longer be in jeopardy. Economists also think this makes sense, and even individual CDU prime ministers were open. However, the FDP has so far insisted that the regulation in the Basic Law will not be affected. CDU leader Friedrich Merz sees it the same way.

Problem 4: Not much time before Christmas

There isn’t much time left for a budget resolution this year – which would be normal. Government spokesman Hebestreit raised the possibility of a special session of the Bundestag before Christmas. But this would be ambitious. The Federal Council also only meets regularly on December 15th.

According to Hebestreit, the alternative would be a budget conclusion in the Bundestag, probably in mid-January. In this case, a temporary budget would apply until the end of January or beginning of February. Then, for the time being, only expenses that are necessary to maintain administration and fulfill legal obligations are possible. In practice, however, the Ministry of Finance can authorize ministries to use a percentage of the funds in the not yet approved draft budget each month. dpa