Federal budget - For the government to spend money next year
At the end, count the result, says Olaf Scholz in a TikTok video about the painstakingly negotiated compromise on the Federal Budget 2025. Marathon sessions, a sleepless night, and anxiety about the coalition's future - all seemingly secondary. "It's done now", emphasizes the Chancellor.
The traffic light government plans to spend over 480 billion Euros next year, more than 10% of which will be on Credit. The cabinet is expected to officially present the budget draft today - despite some ideas still being shaky. Then, the Bundestag is next. The budget approval is scheduled for the end of November.
Key Figures
The budget has a volume of 480.6 billion Euros in total. That's about eight billion Euros less than this year. The Finance Ministry allocates 78 billion Euros as investments - a record level.
Finance Minister Christian Lindner (FDP) intends to take on new loans in the amount of 43.8 billion Euros - slightly less than in the previous year. The German government is allowed to take on this debt according to the Constitution, despite the debt brake. SPD and Greens had considered making an exception for higher loans, but the FDP prevailed.
Focus Areas
The traffic light coalition aims to stimulate the economy, maintain social benefits, and address the tense international security situation with the budget. Defense Minister Boris Pistorius (SPD) receives additional funds, allowing Germany to exceed the NATO quota of two percent of Gross Domestic Product. The Federal Police, Customs, Federal Criminal Police, and other security agencies will be subsidized with almost a billion Euros.
Furthermore, families will be supported through higher childcare benefits and a higher child supplement for working parents with low wages. A total of approximately 23 billion Euros in tax relief is planned for 2025 and 2026. This includes an increase in deductions for income and payroll taxes.
No Austerity Budget
When it comes to negotiations, Lindner is happy to play the tough guy. A balanced budget is only possible, he said in a video released by his ministry, "by curbing the appetite of politics for ever higher state expenditures."
His ministerial colleagues must learn to restrain themselves. "The main task was to bring the individual ministries to the so-called financial plan, that is, what had already been planned in terms of state revenue," says Lindner.
In fact, the comparison of the budget draft with the financial plan for 2025 reveals that Scholz, Economics Minister Robert Habeck (Greens), and Lindner have not imposed an austerity budget. Most ministries will ultimately receive more money than they were promised in the previous year.
Notable exceptions are the Transport Ministry, the Development Ministry, and the Ministry of Building and Housing - with a small minus.
Tricks and decisive open questions remain.
That there are no major savings means that artful maneuvers are necessary for a balanced budget. Lindner plans to account for interest expenses differently in future household technology. He also hopes that through a package for more economic growth, whose key points the cabinet is also set to decide, approximately six billion euros more in tax revenue will come in.
Moreover, there is the so-called global under-expenditure of 17 billion euros. The federal government is betting on the fact that the ministries will not spend the entire amount in that year. This approach is not uncommon, but the amount is very high.
In the 17 billion euros, there are also eight billion euros, for whose financing the federal government already has an idea, but which may be constitutionally questionable. Money that the KfW Development Bank did not use for the gas price brake could flow back to the federal budget. Whether this is watertight remains to be seen.
Lindner also needs to clarify whether it is economically sensible to replace subsidies for the German Railways and the Autobahn agency with loans. These would not be counted towards the debt brake - they could, however, potentially have an impact if the companies borrow money on the capital market. If these three ideas cannot be implemented, Scholz, Habeck, and Lindner may have to renegotiate again.
- In the TikTok video, Chancellor Olaf Scholz expresses satisfaction with the negotiated Federal Budget 2025.
- The traffic light government will allocate over 10% of the budget for Credit next year.
- The Federal Government, led by Scholz, is expected to present the budget draft today.
- The Finance Ministry, under Christian Lindner (FDP), will allocate 78 billion Euros for investments.
- The SDP, Greens, and FDP reached an agreement on the debt limit for new loans, despite the debt brake.
- Defense Minister Boris Pistorius will receive additional funds to exceed the NATO quota for defense expenditure.
- Families will receive higher childcare benefits and a child supplement for low-income workers.
- The Federal Police and other security agencies will receive nearly a billion Euros in subsidies.
- The FDP, under Christian Lindner, is pushing for a balanced budget by curbing excessive state expenditures.
- The Federal Police plans to account for interest expenses differently in future household technology for budget balance.
