They have been negotiating the federal budget for weeks. Instead of less money, most ministries are getting more money – and that is how it is planned.
In the end, the result is what counts, says Olaf Scholz in a Tiktok video about the hard-won compromise on the 2025 federal budget. Marathon meetings, a sleepless night and fear for the future of the coalition – all apparently secondary. “Now it’s finished,” said the Chancellor.
480 billion euros are available
The traffic light government plans to spend more than 480 billion euros next year, almost a tenth of it on credit. Today the cabinet is to officially launch the draft budget, although some ideas are still on shaky ground. Then it will be the Bundestag’s turn. The budget decision is scheduled for the end of November.
The total budget is 480.6 billion euros. That is around eight billion less than this year. The Finance Ministry has allocated 78 billion euros for investments – a record level.
Finance Minister Christian Lindner (FDP) is planning new Loans amounting to EUR 43.8 billionalso slightly less than this year. According to the Basic Law, the federal government is allowed to borrow this money despite the debt brake.
The traffic light coalition wants to use the budget stimulate the economy, maintain social benefits and respond to the tense international security situation All together.
More money for defense
Defence Minister Boris Pistorius (SPD) receives additional moneymeaning that Germany exceeds the NATO quota of two percent of gross domestic product. The Federal Police, Customs, Federal Criminal Police Office and other security authorities will be strengthened with almost one billion.
In addition, families are supported by a higher child benefit and a higher child supplement for working parents with low wages. A total of tax relief of about 23 billion, also through an increase in allowances for wage and income tax.
When it comes to negotiations, Lindner likes to portray himself as tough. A balanced budget is only possible “by curbing politicians’ appetite for ever higher government spending,” he said in a video published by his ministry.
But Scholz, Economics Minister Robert Habeck (Greens) and Lindner have not drawn up a budget for austerity. Almost all ministries will ultimately receive more money than was promised to them last year.
Even Baerbock gets half a billion more
Above all Transport Minister Volker Wissing (FDP) is allowed to spend more money, as is Education Minister Bettina Stark-Watzinger (FDP), Interior Minister Nancy Faeser (SPD), Family Minister Lisa Paus (Greens) and Defense Minister Pistorius. Even Foreign Minister Annalena Baerbock (Greens), who reportedly resisted the negotiations for a long time, will receive over 500 million euros more than was provided for in the financial plan.
The fact that there are no major savings also means that tricks are needed to balance the budget. For example, Lindner wants to record interest expenditure differently in the future. He also hopes that a package for more economic growth, the key points of which are to be approved by the cabinet, will generate around Six billion euros more tax revenue come in.
And then there is the so-called Global spending cut of 17 billion eurosThis means that the federal government is betting that the ministries will not spend all of the money in the year anyway. This is a common practice, but the amount is very high.
The 17 billion also includes eight billion euros, for which the federal government already has an idea of how to finance it, but which may be constitutionally shaky. For example, money that the KfW development bank did not use for the gas price cap could flow back into the federal budget. Whether this would be watertight is still being examined.
Does the traffic light coalition need to return to the negotiating table?
Lindner also needs to clarify whether it would make economic sense to replace subsidies to Deutsche Bahn and the Autobahn company with loans. These would not count towards the debt brake, but could possibly have an impact if the companies want to raise money on the capital market. If the three ideas cannot be implemented, Scholz, Habeck and Lindner may have to renegotiate.
Source: Stern
I have been working in the news industry for over 6 years, first as a reporter and now as an editor. I have covered politics extensively, and my work has appeared in major newspapers and online news outlets around the world. In addition to my writing, I also contribute regularly to 24 Hours World.
