Federal Budget - For this, the traffic light will spend 480 billion Euros
At the end, count the result, says Olaf Scholz in a TikTok video about the painstakingly negotiated compromise on the German budget 2025. Marathon sessions, a sleepless night, and anxiety about the coalition's future – all seemingly secondary. "It's done now," so the Chancellor.
480.6 Billion Euro is Available
The Ampel government plans to spend over 480.6 Billion Euro next year, almost ten percent of which on credit. Today, the cabinet is set to officially present the budget draft, although some ideas are still shaky. Then, the Bundestag is next. The budget approval is planned for the end of November.
The budget has a total volume of 480.6 Billion Euro. That's around eight billion less than this year. 78 Billion Euro is allocated for investments by the Finance Ministry – a record level.
Finance Minister Christian Lindner (FDP) plans to take on new credits amounting to 43.8 Billion Euro, slightly less than this year. The German government is allowed to take on this debt according to the Constitution.
The Ampel Coalition aims to boost the economy, provide social benefits, and address the tense international security situation with the budget.
More Money for Defense
Defense Minister Boris Pistorius (SPD) receives additional funding, 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 boosted by nearly a billion Euro.
Furthermore, families will be supported through higher childcare benefits and a higher child supplement for working parents with low wages. In total, approximately 23 Billion Euro in tax relief is planned for 2025 and 2026. This includes an increase in tax-free allowances for income tax and payroll tax.
When it comes to negotiations, Lindner is happy to play hardball. A balanced budget is only possible, he said in a video released by his ministry, "by curbing the appetite of politics for ever-higher government spending."
However, Scholz, Economics Minister Robert Habeck (Greens), and Lindner have not imposed austerity measures. In the end, most ministries will receive more money than they were promised last year.
Even Baerbock Gets an Extra Half Billion
Notably, Transport Minister Volker Wissing (FDP), Education Minister Bettina Stark-Watzinger (FDP), Interior Minister Nancy Faeser (SPD), Family Minister Lisa Paus (Greens), and Foreign Minister Annalena Baerbock (Greens), who reportedly caused quite a stir in the negotiations, will all receive over 500 Million Euro more than planned.
The lack of significant savings means that creative accounting is necessary for a balanced budget. Lindner hopes to change the way interest payments are recorded in the budget. He also expects to generate around six Billion Euro more in tax revenue through a package for economic growth, which the cabinet is also set to approve.
And there's still the so-called global under-expenditure of 17 Billion Euro. The German government is betting on the ministries not spending the entire budgeted amount in that year. This approach is not uncommon, but the amount is quite high.
In the 17 Billion euros, there are also eight billion euros included, for whose financing the Federal government already has an idea, but it may be constitutionally questionable. So, 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 tested.
Must the traffic light return to the negotiating table?
Lindner also needs to clarify whether it makes economic sense to replace subsidies for the German Railways and the Autobahn agency with loans. These would not be counted towards the debt brake, but could potentially have an impact if the companies borrowed money on the capital market. If these three ideas cannot be implemented, Scholz, Habeck and Lindner may have to negotiate again.
- In the TikTok video, Chancellor Olaf Scholz expresses satisfaction with the painstakingly negotiated budget compromise for 2025, worth 480.6 Billion Euro.
- The Ampel Coalition, comprising the SPD, Greens, and FDP, aims to allocate this budget for boosting the economy, providing social benefits, and tackling international security issues.
- Finance Minister Christian Lindner (FDP) plans to borrow 43.8 Billion Euro through new credits, less than this year's amount, to fund the budget.
- The Future Council, Traffic-Coalition members Robert Habeck (Greens) and Annalena Baerbock (Greens), along with FDP leader Christian Lindner, have avoided imposing austerity measures while providing increased funds for most ministries.
- Transport Minister Volker Wissing (FDP), Education Minister Bettina Stark-Watzinger (FDP), Interior Minister Nancy Faeser (SPD), Family Minister Lisa Paus (Greens), and Foreign Minister Annalena Baerbock (Greens) will receive over 500 Million Euro more than originally planned.
- To achieve a balanced budget, Finance Minister Lindner emphasizes the importance of curbing political spending appetites, but most ministries will still receive more money than promised last year.
- Defense Minister Boris Pistorius (SPD) will receive additional funding to enable Germany to surpass the NATO quota of two percent of GDP in defense spending.
- The Federal government, led by Chancellor Scholz, faces potential constitutional issues if they decide to use unreleased KfW development bank funds, worth over 8 Billion Euro, for the federal budget, as a portion of the so-called global under-expenditure.
