Lindner warns traffic light coalition partners in Latin.

Lindner menaces the coalition allies in Latin.

It's a blow for the current coalition government as a new tax estimate reveals they'll have to make do with less money in the coming years. FinMin Christian Lindner made this known during a presentation, providing insight into the situation. The new projections show a shortfall of 5.6 billion euros this year and 11 billion the year after. This adds up to a total of 80 billion euros missing by 2028. While this is less than previously anticipated in the fall, Lindner highlights factors such as a reduction in electricity tax that hadn't been considered before. "We have over two billion euros less revenue than we anticipated," he stated.

This news is especially significant for the Ampel coalition, which is already facing the most challenging budget negotiations. The stakes are high – if they fail, the government could collapse. But Lindner isn't only cautious for that reason. He's also making it clear to SPD and Greens partners that spending should be prioritized to promote growth. He emphasizes that the "result of the tax estimate shatters the illusion held by some that money would simply fall from the sky and save us from acknowledging fiscal requirements."

The issue is not straightforward, with tricky decisions to be made over where to cut funds. Is it the Bundeswehr, climate protection, or social benefits? Each could argue compelling cases. Agreements on budgets have always been challenging. But with the additional pressure of the debt brake ruling, things get extra tricky. Now, the SPD, Greens, and FDP see different priorities. Some prioritise low-income earners, the unemployed, and climate protection. The FDP, on the other hand, wants to reduce the economic burden.

Despite these challenges, Lindner is unwavering about the debt brake. He argues keeping it can prevent potential interest burdens, offering a sense of security policy. Meanwhile, debate over the debt brake sparks disagreement. The German government's Council of Economic Experts as well as renowned economists Michael Hüther and Sebastian Dullien have expressed support for relaxing its strictness. Lindner, however, disagrees. This leads to a precarious situation regarding the 2025 budget.

Earlier, Lindner had set budget limits for various ministries. They were then supposed to report how much they needed for the coming year and stay below these limits. Naturally, this led to disagreements. For example, Foreign Minister Annalena Baerbock, Development Aid Minister Svenja Schulze, and Defense Minister Boris Pistorius were among those who exceeded these limits, requesting more funding. The latter called for an additional 6.5 billion euros. Lindner then questioned an agreed pension package and even the abolition of the retirement age at 63 – a project of the SPD. The situation is tense.

Lindner is reluctant to disclose the exact budget gap. He only revealed that it lies in the low double-digit billion euro range. This means the government may need to save at least 10 billion euros. Recently, discussions have mentioned potential budget shortfalls in the region of 25 billion euros. Unless a consensus is reached, it's unlikely they'll meet their targets.

The ticking clock doesn't help matters either, as there are only a few weeks left until the deal must be finalized. With tensions already high, time is running out to reach a compromise. The budget negotiations look set to be one of the steepest challenges the government has faced.

However, Lindner's plans don't stop there. He's also determined to reduce taxes, believing this will help combat cold progression - a situation where people pay more tax even after they receive a salary increase that just covers inflation. According to Lindner, this is a cowardly act. He then shares a statement in Latin, conditio sine qua non, which translates to a condition that must be met. If not, there's no budget, and a government unable to manage one is doomed to fail. Lindner emphasizes the necessity of excluding cold progression for people in 2025 and 2026, and providing relief.

Before these changes can be implemented, political agreement must be reached within the federal government. There are varying demands, with some advocating for higher minimum wages while others push for the removal of the solidarity surcharge. The SPD backs the former, while the FDP supports the latter. "We will now bring this together," says Lindner confidently. The federal government plans to achieve this goal by July 3, which is the final cabinet meeting before the summer break. Only seven weeks remain until then.