Coalition dispute - Budget showdown: agreement by Friday or traffic light chaos?
In the intense negotiations about the 2025 budget, the SPD has once again increased the pressure. The Bundestag faction aims for clarity over the government's budget plans by Friday and has scheduled a special session for 7:00 am. The FDP, however, refuses to be rushed into a result.
Bijan Djir-Sarai, general secretary of the German Press Agency, stated to the press, "Thoroughness and a good outcome are crucial for the federal budget, as the overall package must eventually pass."
Habeck: "We need to nail this down now"
Scholz promised in a Bundestag question-and-answer session only that a cabinet decision would be made by the end of the month. He did not set a specific date. Economic Minister Robert Habeck (Greens) urged the coalition partners for compromise. "We need to nail this down now," he said.
Scholz and Habeck have been in negotiations with Finance Minister Christian Lindner (FDP) about the 2025 budget for weeks. Originally, they aimed to finish by this Wednesday. The 17th of July is now under consideration for the cabinet decision. To reach this deadline, a fundamental agreement is necessary in the coming days, as drafting the budget law usually takes approximately ten more days. Negotiations are expected to go on until late Thursday.
The individual budgets are mostly agreed upon, but the social budget is reportedly still a contentious issue. In addition, there is still a billion-dollar gap that needs to be closed. This also involves potential cuts in the Climate and Transformation Fund - from this special pot, the German government finances projects for more climate protection.
The SPD is pushing for the debt brake to be suspended again to have more room for investments. For Lindner's FDP, this is not an option. "The debt brake must be upheld, as it is constitutionally mandated and a question of intergenerational fairness," confirmed Djir-Sarai. The SPD has also drawn a clear red line: there will be no social cuts with it. The decision on the budget lies ultimately with the Bundestag, which will deal with it starting in September - if the cabinet agrees.
Scholz: "Growth Turbo" to boost economy
Along with the budget plan, a package to boost the economy is expected to be passed, which Scholz has dubbed "Growth Turbo." The Chancellor is a fan of such PR terms. His aid packages during the Corona pandemic and later during the energy crisis he called "Bazooka" and "Double-Wumms."
The now planned "Growth Turbo" will "contain many, very smart measures," Scholz assured the Bundestag. "I, for one, already like what I know." Most measures already have complete agreement. "So I assume that the rest will also be achieved. At least that's my confident impression." The parliamentarians were assured by him that the budget deliberations could begin as planned in mid-September. "There will be no disruption to this timeline."
Looking ahead to the upcoming NATO summit, Scholz then added that Germany would, in the long term, spend two percent of its Gross Domestic Product on defense and thus meet the common NATO goal.
Habeck called on everyone, "to go to their pain thresholds" and "sometimes even a meter beyond." Establishments or preconceptions would not help, he emphasized. The budget consultation should also be read against a political background that is greater than party political decisions. He referred to the challenging government formation in France, the "challenging elections" in the USA, and Russia's war in Ukraine.
Similarly, Scholz had already expressed himself on Monday evening at the summer party of the Parliamentary Left of the SPD. He wished for Germany as "an anchor of stability" he said there. The announcement of the results on this Friday should also be in his sense. For his fraction, he will also have to give a speech and answer questions if there is no understanding. And on Tuesday, he is away anyway: at the NATO summit in Washington.
- The SPD is actively engaging in intense negotiations about the 2025 budget in Berlin, aiming for clarity by Friday.
- Bijan Djir-Sarai, the general secretary of the German Press Agency, emphasizes the importance of thoroughness and a good outcome for the federal budget.
- Habeck, an economic minister from the Greens, urges coalition partners to reconcile and finalize the budget plans immediately.
- The coalition dispute between the SPD, Greens, and FDP over the budget has been ongoing for weeks, with a potential decision date set for the 17th of July.
- Christian Lindner, the Finance Minister of the FDP, maintains that the debt brake, a constitutionally mandated requirement, must be upheld.
- Robert Habeck and Olaf Scholz, the Chancellor, have proposed suspending the debt brake to allow for more investment, a proposal that the FDP has rejected.
- German Press Agency confirms that the SPD has drawn a clear red line, assuring no social cuts will be made, and the budget decision lies with the Bundestag, starting in September.
- The FDP, a key coalition partner, is opposed to the SPD's proposal to suspend the debt brake, advocating for intergenerational fairness and upholding the constitutionally mandated debt brake.
