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Pretty red: The coalition’s budget dispute may have unpleasant consequences for Deutsche Bahn and its customers. © Kirill Kudryavtsev/AFP
The leaders of the traffic light coalition have reached an agreement on a draft budget after renegotiations. The result raises a number of questions. The loan trick with the railways is causing particular trouble.
In the end, says the finance minister, there was nothing more to be done. It is “a reality that there are mutual limits,” says Christian Lindner (FDP) during a television appearance about the new budget. “Nothing more was possible in the coalition.” At least he prevented tax increases and the removal of the debt brake.
What Lindner finds acceptable is causing anger among experts and the opposition. The hard-won traffic light agreement on the federal budget for 2025 has been met with clear criticism since Friday. The Munich constitutional lawyer Stefan Korioth, for example, considers it to be legally risky. The university professor sees the high global underspending as “the biggest problem with this compromise”, i.e. the assumption that 12 billion euros will be planned but may not be spent in the end. This instrument is common, but not in this amount, he tells the Berlin newspaper. Daily Mirror“This raises the question of whether this is simply an attempt to conceal a shortfall in coverage.” Until 2021, this had not even existed in households for many years.
Budget 2025: Trick in financing model for Deutsche Bahn
The new compromise from Friday essentially provides for the reallocation of money for the state-owned Deutsche Bahn. The gap was reduced from 17 to 12 billion euros. Time was running out for the top trio of Chancellor Olaf Scholz (SPD), Vice Chancellor Robert Habeck (The Greens) and Finance Minister Lindner (FDP) because the Bundestag should have enough time to deal with the figures before the budget week in September. The MPs will decide on the budget at the end.
Traffic light coalition: The Scholz cabinet at a glance
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Union parliamentary group vice-chair Ulrich Lange (CSU) speaks of a “harakiri budget”. AfD leader Alice Weidel calls the draft “completely dubious”. SPD parliamentary group vice-chair Achim Post admits that there is still a lot to do for the Bundestag. His parliamentary group wants to “achieve further improvements as far as possible, as it usually does in parliamentary deliberations”.
The traffic light coalition is facing trouble because of a new financing model for Deutsche Bahn, which could result in higher track access charges for competitors and higher fares for their customers. According to the compromise, the infrastructure division of Deutsche Bahn AG is to receive additional equity of 4.5 billion euros. This is to replace direct subsidies from the federal budget. Trick: The equity subsidy is not counted towards the debt brake.
The railway is also to receive a loan from the federal government in the amount of 3 billion euros. The railway is to use the money to invest in the renovation of the dilapidated rail network. For financing reasons, more equity for the railway could mean rising track prices – i.e. fees for using the rail network, a kind of rail toll.
Financing model for Deutsche Bahn “extremely critical”
Constitutional lawyer Korioth notes: “It is well known that Deutsche Bahn is experiencing economic difficulties and is repeatedly in deficit, which is why repayment of the loan cannot necessarily be factored in. And with a loan term of 34 years agreed in the compromise, the question arises as to whether the coalition does not doubt the ability to repay.” Ten to twelve years would not be unusual. CSU politician Lange is also not very optimistic: “The heavily indebted Deutsche Bahn will not be able to repay the loans and will sink the equity increase somewhere in the group, as has happened several times before.”
The Pro-Rail Alliance sees the financing model as “extremely critical,” as the head of transport policy at the railway association, Andreas Geißler, emphasises. “Increases in equity capital instead of the usual construction cost subsidies lead to higher track prices, which consequently make the use of rail infrastructure significantly more expensive for railway companies and thus for the economy and travellers.” The Freight Railway Association, which represents around 110 private, regional and international companies, was even more explicit. Managing director Neele Wesseln spoke of a “black Friday for the railways in Germany”. The decision will result in millions of losers. “The disastrous agreement conceals the cost-increasing consequences for railway customers in passenger and freight transport,” criticised Wesseln.
