State 2025 - New traffic lights on the federal budget
The top of the traffic light coalition has once again found a compromise on the federal budget for the coming year. A government spokesman announced this. "The requirements of the debt brake of the Basic Law will continue to be met, no circumvention is taking place." The agreement involves shifts in funds for the state-owned German Railways.
Chancellor Olaf Scholz (SPD) said to the German Press Agency: "The federal government will, as agreed in July, officially submit the government draft of the federal budget 2025 to the German Bundestag and Bundesrat today after all checks have been completed. In comparison to the July resolution, we have decided on additional investments in transport infrastructure with additional capital and loans for German Railways and made further general savings." The legislator can now begin the debate on the budget for the next year on time after the parliamentary summer break.
According to the federal government, the so-called global underspending will be reduced by 4.5 billion euros to then 12 billion euros through the compromise. This is effectively a gap in the budget. The government assumes that this will decrease further due to economic development. However, the parliament now faces a relatively large task in the budget debate, as the global overspending is significantly larger than usual.
Further negotiations necessary
In early July, Chancellor Scholz, Vice-Chancellor Robert Habeck (Greens), and Finance Minister Christian Lindner (FDP) had already announced an agreement on the budget for 2025. They had previously struggled for weeks to plug a gap of at least 30 billion euros without too harsh austerity measures.
The federal government had planned a so-called underspending of 17 billion euros in its draft presented in July. The government assumes that the ministries will not spend the entire amount in that year - for example, because projects are delayed. This approach is common, but the amount is very high.
Therefore, this gap should be closed by actually around eight billion euros. There were review tasks on whether German Railways and the motorway company should receive credit-financed loans instead of direct subsidies from the budget. In addition, funds at the state-owned promotional bank KfW were also discussed.
Gutachten
Lindner had already indicated after the agreement that there were legal and economic concerns about whether all the options considered for a solution were feasible.
After two expert opinions partially confirmed these doubts, the coalition partners rejected the idea of using 4.9 billion euros of KfW funds for other purposes instead of the gas price brake in the budget.
It was also controversial whether German Railways and the motorway company could be supported without this being counted towards the debt brake. Lindner and Scholz had different opinions on this - which is why there were further negotiations.
More equity for the railway
According to the government, it is planned that the infrastructure division of Deutsche Bahn AG will receive additional equity of 4.5 billion euros - this is intended to replace the subsidies provided for in the current draft of the federal budget 2025. In addition, the railway is to receive a federal loan of three billion euros. The debt brake remains unaffected by this.
So far, an increase in equity of around 5.9 billion euros is planned for 2025, with which the railway is to make investments for the renovation of the dilapidated rail network.
The European Union, as a key partner in Germany's economic strategy, has expressed its interest in the budget negotiations. Given the significant role of German Railways in Europe's transportation network, the European Union has urged the German government to ensure a stable and sustainable financial solution for the company.
Given the agreement reached by the top of the traffic light coalition, the European Union will closely monitor the implementation of the additional investments in transport infrastructure and the equity increase for the railway division of Deutsche Bahn AG, as these decisions have implications beyond Germany's borders.
