Finance: Negotiations on the budget: No “white smoke” yet

Negotiations in the traffic light coalition over the 2025 budget are apparently ongoing. No breakthrough had been announced as of this afternoon. The aim is to close the remaining billion-dollar gaps in the draft budget.

Representatives of the federal government had promised an agreement by the end of the week. The draft approved by the cabinet will then go to parliament – the members of parliament need time to work through the document, which is over a thousand pages long. According to current status, the budget is to be discussed for the first time in the Bundestag during a budget week starting on September 10th and then approved in late autumn.

At the beginning of July, Chancellor Olaf Scholz (SPD), Vice Chancellor Robert Habeck (Greens) and Finance Minister Christian Lindner (FDP) had already announced an agreement on the budget for 2025. They had previously struggled for weeks to close a gap of at least 30 billion euros. This should then have been achieved without overly harsh austerity measures.

Billion-dollar gap

In the draft presented in July, the federal government had planned a so-called reduced expenditure of 17 billion euros. The federal government assumes that the ministries will not spend all of the money in the year anyway – for example because projects are delayed. This approach is quite common, but the amount is very high.

This gap therefore needed to be closed, and this gap needed to be closed by around eight billion euros. In addition, there were orders to examine whether the railway and the motorway company should receive credit-financed loans instead of direct subsidies from the budget. Another issue was money from the state development bank KfW.

Renegotiations on the budget

Lindner had already made it clear after the agreement that there were legal and economic concerns as to whether all the projects envisaged for a solution could be implemented

After two reports had partially confirmed the doubts, the coalition partners rejected the idea of ​​using 4.9 billion euros from the KfW for other purposes in the budget instead of for the gas price cap.

There was also controversy over whether the railway and motorway companies could be supported without this having to be counted towards the debt brake. Lindner and Scholz had different opinions on this – which is why renegotiations were now taking place. There was talk that a gap of five billion euros still had to be closed.

More equity for the railway

In the case of Deutsche Bahn, it is considered likely that the state-owned company will receive an additional equity injection of several billion euros. Such a financial transaction would not be counted towards the debt brake.

So far, an equity increase of around 5.9 billion euros is planned for 2025, which the railway will use to make investments to renovate the dilapidated rail network.

However, more equity for the railways would mean further increases in track prices – these are fees for using the rail network, a kind of rail toll. There are fears that higher costs will slow down the shift of freight traffic to rail.