Finance Ministry: New borrowing for 2024 should reach 50.3 billion Euros
The debt brake is supposedly to be maintained in both years and throughout the financial planning period until 2028. The higher debt is particularly likely for 2024 due to the weak economic growth, making a higher credit take-up permissible.
The expenditure volume is increasing to 488.9 billion Euro in the current year, 12.1 billion Euro more than previously planned. The largest part of the additional expenditures is used to cover additional requirements for subsidies for renewable energies and higher costs for citizen's income.
The expenditure volume for 2025 is given as 480.6 billion Euro, less than in the current year. A further expenditure reduction to 474.6 billion Euro is planned for 2026, before the budget volume increases slightly to 497.8 billion Euro in the following years. The credit take-up is supposed to continue to decline, investments are initially expected to remain roughly constant, and then also decrease in 2028.
From the Finance Ministry, there have been talks of further steps towards "financial political normalization." The government reportedly hopes for the growth initiative agreed upon in the budget plans to stimulate economic growth and reduce social expenditures - for example, through more incentives for employment or a later retirement age.
However, the financial plan contains significant uncertainties. The draft for 2025, for example, contains a gap of nine billion Euro that is supposed to be closed in the budget implementation.
Furthermore, a gap of eight billion Euro is supposed to be closed as soon as possible before the planned submission of the draft law to the Bundestag. This concerns, among other things, checks regarding the liquidity surplus of the federal-owned promotional bank KfW as well as loans to the German Railways and the Autobahn GmbH.
Significant gaps, according to the Finance Ministry, exist for the following years. For 2026 and 2027, there was talk of an additional need for action of 13 billion Euro each, and for 2028, even of around 39 billion Euro. This is mainly due to the fact that then the funds from the Bundeswehr Special Fund will have been used up, and the government is planning an increase in the defense budget to 80 billion Euro.
For 2025, however, only a limited increase in the defense budget of about 1.3 billion Euro to 53.3 billion Euro is planned. Increases are registered for the coming year mainly in the individual plans for labor and social matters, transport, research and education, and construction. However, significant cuts are made, for example, in funds for humanitarian aid at the Foreign Office, development aid, and the Economic Ministry.
The budget plan contains tax relief measures of 23 billion Euro for the years 2025 and 2026, as well as additional expenditures for slightly higher child benefit and child supplements and child allowances. However, funds for the planned child allowance are not included in the budget plan.
Negotiations over the exact implementation of the budget for 2025 have been bitterly contested within the coalition, and the detailed negotiations are still ongoing. However, they may also continue in the parliamentary proceedings.
- The Federal Finance Ministry projects a potential New Debt of around fifty billion Euro by 2024 due to the weak economic growth, leading to a higher credit take-up.
- The European Currency, the Euro, is expected to increase to 488.9 billion in the current year, largely due to additional expenditures for subsidies and citizen's income.
- The Federal government, aiming for 'financial political normalization', hopes that the growth initiative will reduce social expenditures, potentially leading to billions in savings.
- Significant uncertainties remain in the financial plan, with gaps of up to nine billion Euro and eight billion Euro needing to be closed before 2025 and the submission of the draft law, respectively.
- The Finance Ministry anticipates further significant gaps in the defense budget for 2026 and 2027, requiring additional action of around 13 billion Euro each, and about 39 billion Euro in 2028 due to Bundeswehr Special Fund expenditures and an increase in the defense budget.
