Budget agreement: "traffic light" wants to comply with debt brake - CO2 price higher in 2024

Budget agreement: "traffic light" wants to comply with debt brake - CO2 price higher in 2024

Following the Federal Constitutional Court's budget ruling, the coalition government would have to "make do with significantly less money", said Scholz. However, the coalition is sticking to its central goals: "We are driving forward the climate-neutral restructuring of our country, we are strengthening social cohesion and we continue to stand closely by Ukraine."

Scholz had worked intensively with Economics Minister Robert Habeck (Greens) and Finance Minister Christian Lindner (FDP) over the past few days to find a solution. "It was hard but constructive work," said Scholz. "In the end, we have a good compromise that is democratic in the true sense of the word."

The agreement provides for a bundle of measures consisting of savings and subsidy reductions. The CO2 price is to rise to the level of 45 euros per tonne planned by the previous government in 2024, as Habeck said at a joint press conference with Scholz and Lindner. That is five euros more than previously planned.

According to Lindner, environmentally harmful subsidies will be reduced by a total of three billion euros. According to Lindner, a further 1.5 billion euros are to be saved in the area of the labor market - for example through better job placement for refugees from Ukraine. According to Habeck, the environmental bonus, i.e. the subsidy for electric vehicles, is also to expire earlier than planned.

According to Lindner, the Climate and Transformation Fund(KTF), which is used to finance energy transition projects, will be cut by 12.7 billion euros in the coming year. According to Scholz, 45 billion euros will be cut by 2027. However, this would "still leave a very high total volume" of 160 billion euros in the fund, the Chancellor emphasized.

One of the individual measures is that the modernization of the railroads will no longer be financed from the KTF. The coalition is taking a "creative approach" here, said Lindner. The government wants to use privatization proceeds from unneeded federal shareholdings "in part to strengthen the railroads", he said.

Federal Minister for Family Affairs Lisa Paus (Greens) called it "good news" that her department would not be affected by cuts. Projects such as the Children and Youth Plan could therefore continue to be funded "to the extent planned to date".

The federal government is not planning to suspend the debt brake for the coming year either - however, Scholz did not rule out a renewed suspension if Ukraine's military or financial situation were to deteriorate significantly in the coming year. He cited the situation on the front or the reduction of aid to Ukraine by other previous supporters.

An exception to the debt rule is to be examined for federal aid to deal with the flood disaster in the Ahr valley. Scholz pointed out that the credit ceilings for coping with natural disasters could be raised. In the coming year, an amount of 2.7 billion euros is involved.

Finance Minister Lindner said that this sum was "not likely to jeopardize the stability of the federal budget". The coalition wanted to "seek talks with the CDU/CSU parliamentary group in order to find a way to provide legal certainty here".

The head of the CDU/CSU parliamentary group, Friedrich Merz (CDU), was sharply critical: in contrast to Chancellor Olaf Scholz's (SPD) presentation, it was already clear that the debt brake would have to be suspended again by the middle of next year at the latest, he said in the Bundestag. "You know that you cannot keep to what you have said here today." This is the "usual trickery" of the Federal Chancellor.

AfD leader Tino Chrupalla accused the coalition of a complete failure in economic policy. "The way this country is being run into the ground has never been seen since the Second World War," he said. The budget measures now agreed, such as the increase in the CO2 price, made Germany "even less attractive" as a business location.

Janine Wissler, leader of the Left Party, accused the coalition government in the Funke Mediengruppe newspapers of making cuts "without sense". Instead, she called for the abolition of the debt brake and higher taxes on the super-rich and corporations.

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1. The "traffic light" coalition plans to adhere to the debt brake while increasing the CO2 price in 2024, as stated by Chancellor Olaf Scholz.
2. The agreement between the coalition parties includes measures such as savings and subsidy reductions, with the CO2 price rising to 45 euros per tonne in 2024, according to Christian Lindner.
3. Robert Habeck, the Green Party's Economics Minister, announced that the CO2 price increase is five euros above the previous government's plans.
4. According to Lindner, the Climate and Transformation Fund (KTF) will see a reduction of 12.7 billion euros in the next year, with Scholz mentioning a total cut of 45 billion euros by 2027.
5. One of the measures in the budget agreement is the modernization of railroads no longer being financed from the KTF, with the government planning to use privatization proceeds for rail development, as per Lindner.
6. Lisa Paus, the Green Party's Federal Minister for Family Affairs, stated that her department would not be affected by cuts, allowing projects like the Children and Youth Plan to continue as planned.
7. The coalition will not suspend the debt brake for the coming year, but Scholz has not ruled out the possibility in the event of a significant deterioration in Ukraine's military or financial situation.
8. An exception to the debt brake rule is being considered for federal aid in dealing with the flood disaster in the Ahr valley, with Scholz mentioning the potential raising of credit ceilings for disaster relief measures.
9. Finance Minister Lindner noted that the 2.7 billion euros for disaster relief in the coming year is unlikely to jeopardize the stability of the federal budget, prompting the coalition to seek discussions with the CDU/CSU parliamentary group for legal certainty.
10. The CDU/CSU parliamentary group leader, Friedrich Merz, criticized the coalition's adherence to the debt brake, stating that a suspension was imminent by mid-2023 at the latest, according to Merz.

Source: www.stern.de