Federal Government - Coalition agrees on budget and growth package
The heads of the traffic light coalition have achieved a breakthrough in the 2025 federal budget and the growth package after lengthy negotiations. This was reported by the German Press Agency from coalition circles following consultations between Federal Chancellor Olaf Scholz (SPD), Finance Minister Christian Lindner (FDP), and Economics Minister Robert Habeck (Greens).
They had met in the afternoon. Details of the agreement were initially not disclosed. The Bundestag factions of the SPD and Greens were to convene for meetings at 7 p.m.
Coalition leaders in budget stress
Scholz, Habeck, and Lindner had been in negotiations in recent weeks. They had originally aimed to reach an agreement by this Wednesday. Now, July 17, is being discussed for the cabinet decision. In order to meet this deadline, a swift consensus was necessary, as the drafting of the budget law usually takes about ten days. The Bundestag is then expected to deal with the draft budget in mid-September, which could then be passed in November or December.
Billion-dollar gap
Individual ministries such as the Foreign Office or the Development Ministry initially refused to accept spending cuts proposed by Lindner due to international obligations. The social budget was also a contentious issue. In addition, a gap of around 10 billion euros still had to be closed. Above all, the SPD insisted on postponing the financial burden of the Ukraine war and the debt brake again to have more room for investments. For Lindner's FDP, this was not an option. The SPD rejected cuts in the social budget.
Growth package
In Germany, only minimal growth is expected this year. Companies are holding back on investments, and private consumption is not picking up. Business associations have long been complaining about disadvantages such as high tax and tax burdens, a lack of skilled workers, and too much bureaucracy.
Here, the government plans to start with the "growth turbo." Scholz had already stated that the federal government wants to encourage private investments. He held out the prospect of improved tax depreciation allowances for companies. In addition, the acquisition activity of parents was to be facilitated, and employment incentives were to be increased, tax-wise as well.
- The Federal Government's 'Growth Package' is expected to address the minimal growth in Germany this year, with a focus on encouraging private investments and reducing tax burdens for companies.
- Despite the initial refusal from certain ministries such as the Foreign Office and the Development Ministry to accept spending cuts proposed by Finance Minister Christian Lindner, the Federal Government, including the Household of Scholz, Habeck, and Lindner, managed to achieve a breakthrough in budget negotiations, paving the way for the Growth Package.
- The 'Traffic Light Coalition' leaders, including Chancellor Olaf Scholz and Finance Minister Christian Lindner, recently held discussions in Berlin to finalize the details of the Growth Package, which is expected to significantly contribute to Germany's economic growth and help close the billion-euro gap in the federal budget.
