Merz sees debt brake confirmed

In the aftermath of lengthy negotiations, the traffic light coalition has agreed on key points regarding the budget and a growth package. Finance Minister Lindner of the FDP prevailed in the debate on the debt brake. CDU leader Merz welcomed this decision but warned against further debts. CSU leader Söder criticized the agreement as inadequate.

For CDU leader Friedrich Merz, the budget agreement of the traffic light government demonstrates that a reform of the debt brake is not necessary. "The debt brake, as it is designed in the Basic Law, is correct," Merz stated in the ARD-"Morgenmagazin". "It has so far ensured that we have not taken on excessive debts. It provides ample room." These opportunities have been utilized by the coalition, and they showed that a government can take on debts even with the debt brake in effect. "And that is what the coalition is currently doing. In addition to making further debts, is irresponsible," Merit emphasized.

Bavaria's Minister-President Markus Söder criticized the agreement of the traffic light coalition in the budget dispute as insufficient. "This is not enough for a fundamental turnaround," Söder stated in Berlin before journalists. Germany needs a "comprehensive fitness program, not a patchwork and emergency kit." A premature exit from the traffic light coalition, which CSU chairman Soeder had previously anticipated, is no longer expected. The downward trend appears to have been averted. However, a long-term perspective is lacking, and the coalition partners are still far apart.

Söder particularly criticized the insufficient financial funding of the Bundeswehr, which he considered a threat to the security situation. In the transportation sector, Germany is increasingly becoming a "pothole republic," with no solutions in sight regarding the financial funding in the healthcare sector and for migration issues.

The coalition leaders had previously reached a breakthrough in negotiations on the federal budget 2025 and the growth package. A major point of contention in the talks was the debt brake: Above all, the SPD insisted on suspending it due to financial burdens from the Ukraine war. Finance Minister Christian Lindner and his FDP opposed this. The agreement now provides for the debt brake to be maintained, according to government sources. A state of emergency was therefore not declared.

According to SPD parliamentary group deputy chairman Achim Post, the government has also agreed on a supplementary budget for 2024. This would enable further funds to be mobilized, Post said on Deutschlandfunk. The growth package within the new budget could also provide an additional boost of 0.5 to 0.6 percentage points to the economic power.

Union finance expert Christian Haase has expressed skepticism about the coalition's agreement on the federal budget 2025. Haase stated: "The agreement may be good for the continuity of the coalition, but it is questionable whether it is good for Germany. The lengthy process itself was a political quagmire with almost daily discord and far removed from quiet governance. We'll see how long the agreement lasts."

The upcoming state elections, which are expected to yield poor results for the traffic light coalitions, will show whether the coalition will still exist and the debt brake will continue to stand. "It seems that there will be only half-hearted or no solutions to the results - for example, in the area of migration, the Bundeswehr, or citizens' income."

The Chairman of the Defense Committee in the Bundestag, Marcus Faber of the FDP, welcomed the coalition agreement on the budget. "The renewed growth of the defense budget underlines the high priority of the Bundeswehr modernization," Faber told the Funke Media Group newspapers. "The federal government sets the right priorities for the security of our republic in its draft." Defense Minister Boris Pistorius' budget is expected to grow next year, but not as much as Pistorius had hoped.

"Examining the coalition closely"

Green European politician Anton Hofreiter was pleased with the breakthrough. "Given the global situation, it would have been completely irresponsible if the government had fallen apart now," said the Chairman of the European Affairs Committee in the Bundestag to journalists. Germany has "a great responsibility" for maintaining cohesion and defense readiness in Europe. "Of course, we need to examine the coalition closely."

In Green circles, it was highlighted positively that pensioners will be able to work tax-free in the future. For the Climate and Transformation Fund (KTF), new funds should be secured. However, agreements in the area of citizens' income were viewed negatively - there is certainly still a need for talks, it was said from the Greens.

Dröge: The budget must not leave the country bankrupt

Green Fraktion Chair Katharina Dröge demanded from the federal government, in view of the fundamental coalition agreement, that the federal budget in 2025 makes room for necessary investments. "For us Greens, it was always clear, and that is still my expectation of this budget, that we cannot create a budget that bankrupts this country," Dröge said before the Green faction meeting, in which Federal Economics Minister Robert Habeck will present the results of the agreement.

The Greens placed a clear priority on the areas of children and families, climate protection, and the support of the economy in challenging times. "My expectation is that the budget will reflect this," Dröge said. "My expectation is that it will." The federal budget will still be debated by the Bundestag deputies and "improved." She also made it clear that a modernized debt brake, which allows for higher debts, would have been a better way for the budget, but this failed not only with the FDP but also with the Union.

SPD Fraktion Chair Rolf Mützenich confirmed the coalition agreement on the 2025 federal budget and also announced further child benefit increases. The Klima- and Transformation Fund is also secured. The budget will be in the cabinet until July 17. Mützenich had advocated for a political agreement on the budget before the parliamentary summer break, which begins next week.

In response to the budget agreement, Friedrich Merz from the Union parliamentary group stated that the debt brake, as it is designed in the Basic Law, is adequate and has prevented excessive debts in Germany.
The FDP, led by Finance Minister Lindner, was able to preserve the debt brake in the negotiations with the traffic light coalition, which includes the SPD and the Greens.
Despite criticism from the CSU and CDU leaders, the traffic light coalition, consisting of the SPD, Greens, and FDP, has agreed on maintaining the debt brake in the federal budget 2025.
The FDP, a member of the traffic light coalition, played a key role in ensuring the maintenance of the debt brake, which has been a point of contention in negotiations between coalition partners.