Federal Government - Despite billions in deficits: Cabinet to pass budget
The Federal Government is set to bring its contested budget for next year onto the legislative path this week. After that, the budget proposal will go to the Bundestag, where it is intended to be passed before the end of the year. However, the traffic light coalition aims to raise an additional eight billion euros beforehand, which currently represents a gap in the plans. If this is not achieved, negotiations may have to be held again.
The Federal Government is currently examining several measures constitutionally and economically to close the gap, according to the Ministry of Finance Minister Christian Lindner (FDP). Among other things, it is being considered whether billion-euro subsidies for the railway and the motorway company can be replaced with loans. This money would not be counted towards the debt brake. If the examinations yield negative results, the traffic light coalition may have to discuss savings measures again.
A supplementary budget for 2024 is also intended to be passed
Additionally, the cabinet intends to pass a supplementary budget for the current year. In total, the Federal Government plans to take on new debt of 50.3 billion euros in 2024. This is 11.3 billion euros more than originally planned. The debt brake will still be maintained, as it allows the Federal Government to take on higher credits due to the weaker conjuncture.
Chancellor Olaf Scholz (SPD), Vice-Chancellor Robert Habeck (Greens), and Finance Minister Lindner reached an agreement at the beginning of July after weeks of negotiations to maintain the debt brake in 2025 and shift expenses. During the talks, the continuation of the traffic light coalition was considered endangered.
In an effort to bridge the budget gap of eight billion euros, the traffic light coalition is exploring various options, including potentially switching billion-euro subsidies to loans for the railway and motorway companies. The Federal Government, led by Chancellor Scholz, Vice-Chancellor Habeck, and Finance Minister Lindner, is also planning to pass a supplementary budget for the current year. Due to the weaker economic conditions, the Federal Government is allowing itself to take on higher credits, adhering to the debt brake. The agreement to maintain the debt brake in 2025 and shift expenses was reached by the coalition leaders after extensive negotiations.
