The details were haggled over for a long time, but now the leaders of the traffic light coalition have agreed on a new compromise on the budget for the coming year. Next it is the Bundestag’s turn.
The leaders of the traffic light coalition have once again found a compromise on the federal budget for the coming year. “The requirements of the debt brake in the Basic Law will continue to be complied with, and there will be no circumvention,” said government spokesman Steffen Hebestreit.
However, the financial gap is larger than originally intended. The government’s goal was actually to reduce the deficit from 17 billion euros to nine billion euros. In the now amended government draft, there is still a gap of twelve billion euros despite high new debt within the framework of the debt brake.
Funds for Deutsche Bahn are being reallocated
In essence, the agreement provides for the reallocation of funds for the state-owned Deutsche Bahn. The company will receive an equity injection of 4.5 billion euros, which will replace planned subsidies and increase the government’s permissible new debt by the same amount.
In addition, around 300 million euros higher payments by the energy company Uniper to the federal budget will be included and the provision for the loss of tax revenue in the EU energy crisis contribution will be reduced by 200 million euros.
This will reduce the so-called global underspending by EUR 4.5 billion to EUR 12 billion. The government assumes that this gap in the budget will be reduced further by economic development.
Government meets self-imposed deadline
With this agreement, the government remained within the self-imposed deadline of forwarding the draft budget to the Bundestag and Bundesrat today. The entire cabinet was supposed to approve it by the evening in a written circulation procedure.
The Bundestag will discuss the draft in the second week of September. However, it now faces a comparatively large task because the global reduction in spending is significantly greater than usual.
Numerous changes are expected before the budget is approved at the end of November.
Relief in the coalition
Following the agreement, FDP leader Christian Lindner spoke of very difficult negotiations. “We have reached our limits – in every respect. The political differences are there.” However, the decisive factor is that there is a result at the end.
Vice Chancellor Robert Habeck said it was good that an agreement had finally been reached. Everything else would be clarified in the next few weeks. “For me, it is crucial that we now move forward quickly with the growth initiative alongside the budget, because our economy needs impetus now.”
SPD leader Saskia Esken also praised the compromise. It was “an important signal that Olaf Scholz now has the cabinet decision on the budget in the bag,” she told the newspapers of the Mediengruppe Bayern.
Criticism from the Union, encouragement from the economist
Criticism of the new draft, however, came from the Union: The government had been “walking around the tightrope” over the budget for months, “only to then present something in a second attempt that is still highly questionable from a constitutional point of view,” said the Union parliamentary group’s budget policy spokesman, Christian Haase (CDU). “With this budget, we will not achieve the necessary ‘turnaround’ that citizens and companies are longing for,” Haase said with conviction. “Germany’s condition is that of a sick patient who unfortunately lacks the right medicine.”
Economist Jens Südekum disagrees: “The traffic light coalition played it safe with its budget agreement,” said the professor of international economics at Heinrich Heine University in Düsseldorf.
In total, there will only be loans and an increase in equity at Deutsche Bahn, which can be realized as financial transactions without being counted towards the debt brake. “The legal situation here seems to be very clear and certain,” says the expert, who is a member of the Scientific Advisory Board of the Federal Ministry of Economics.
First agreement in July
The Federal Cabinet had actually already approved the draft budget for 2025 in mid-July. It still contained a financing gap of around 17 billion euros, which was to be significantly reduced through various measures.
But a dispute arose again over the exact path. Chancellor Olaf Scholz, Vice Chancellor Habeck and Federal Finance Minister Lindner resumed talks with the aim of reaching a result by this Friday.
