Coalition dispute: Budget showdown: Agreement by Friday or traffic light chaos?

In the tough negotiations on the 2025 budget, the SPD has once again increased the pressure to make a decision. The parliamentary group wants clarity on the government’s budget plans by Friday and has scheduled a special meeting on the subject for 7 a.m. The FDP, however, does not want to be rushed to a result. “When it comes to the federal budget, thoroughness and a good result are paramount, because in the end the overall package has to be right,” General Secretary Bijan Djir-Sarai told the German Press Agency.

Habeck: “We have to nail this thing down now”

During a question time in the Bundestag, Scholz only promised that there would be a cabinet decision by the end of the month. He did not commit to a date. Economics Minister Robert Habeck (Greens) called on the traffic light coalition partners to be willing to compromise. “We have to nail this thing down now,” he said.

Scholz and Habeck have been discussing the budget for 2025 with Finance Minister Christian Lindner (FDP) for weeks. The three of them actually wanted to finish by this Wednesday. Now July 17 is being discussed for the cabinet decision. In order to reach this date, however, an agreement in principle is necessary in the next few days, because the drafting of the budget law then usually takes another ten days. Negotiations are expected to last until late into the night on Thursday, if necessary.

The individual budgets have largely been negotiated, but the social budget is reportedly still the most controversial. There is also a billion-euro gap that needs to be closed. This also includes possible cuts in the climate and transformation fund – the federal government uses this special fund to finance projects for more climate protection.

The SPD is pushing for the debt brake to be suspended again in order to have more room for investment. For Lindner’s FDP, this is out of the question. “The debt brake must be adhered to because it is constitutionally required and a question of intergenerational justice,” Djir-Sarai affirmed. The SPD has also drawn a clear red line: there will be no social cuts under it. The decision on the budget ultimately lies with the Bundestag, which will deal with it from September – if the cabinet agrees.

Scholz: “Growth boost” to boost economy

Together with the budget, a package to stimulate the economy is to be approved, which Scholz has dubbed the “growth boost”. The Chancellor is a fan of such PR terms. He called his aid packages during the Corona pandemic and later during the energy crisis “bazooka” and “double oomph”.

The “growth boost” now planned will contain “a lot of very clever measures,” Scholz assured the Bundestag. “I certainly like what I know now.” There is already complete agreement on most of the measures. “So I assume that the rest will be done too. At least that is my firm impression.” He assured parliamentarians that budget discussions can begin as planned in mid-September. “There will be no disruption to this timeline.”

With a view to the NATO summit next week, Scholz then promised that Germany would spend two percent of its gross domestic product on defense in the long term and thus meet the common NATO target.

Negotiating to the limit

Habeck appealed to everyone to “go to their limits of pain” and “sometimes even a meter beyond them.” He stressed that determinations or pre-determinations would not help. The budget discussions must also be read against a political background that is greater than the party-political decisions. He pointed to the difficult formation of a government in France, the “challenging elections” in the USA and Russia’s war in Ukraine.

Scholz had already expressed similar views on Monday evening at the summer party of the SPD’s parliamentary left. He said there that he wanted Germany to be an “anchor of stability”. An announcement of the results this Friday would also be in his interest. He will have to answer to his parliamentary group if no agreement is reached. And on Tuesday he will be away again anyway: at the NATO summit in Washington.