The government plans to allocate an extra eleven billion euros in their budget for 2024.

The government plans to allocate an extra eleven billion euros in their budget for 2024.

The FDP-led Federal Ministry of Finance has informed the traffic light coalition about potential solutions for addressing the current economic situation, suggests AFP. The option of taking on extra debt because of the conjunctural component of the debt brake is being considered. This regulation allows the state to somewhat breach the constitutional debt limit of 0.35% of GDP during times of sluggish economic growth.

Based on these recalculations, the coalition estimates that an extra eleven billion euros in debt would be possible. The FDP faction clarified that "the debt brake will not be suspended, but the calculation for the allowed net credit increase will be adjusted to the worsened than expected economic situation." Other alternatives instead of a supplementary budget, including a budget freeze or further measures within the ministries' budgets, have not been ruled out.

The extra debts acquired would be used to cover additional expenses that could arise during the year. The FDP faction referenced additional costs totaling around three billion euros for the citizen's allowance and additional federal defense aid of 3.8 billion euros. There's also the potential for the EEG surcharge in the Climate and Transformation Fund (KTF) to tack on an additional nine billion euros due to the guaranteed feed-in tariff this year.

The Social Association Germany (SoVD) was surprised by Lindner's considerations and accused him of misplacing priorities. "It's astonishing that Christian Lindner and his ministry are working on a supplementary budget when it would actually mean more debt," said SoVD managing director Michaela Engelmeier to the Funke newspapers. Social political initiatives like the child security and the pension package II, which Lindner has previously cut or postponed due to financial concerns, were brought up as examples.

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1. The traffic light coalition is considering a supplementary budget of eleven billion euros for 2024, as suggested by the FDP-led Federal Ministry of Finance.
2. The potential solution for addressing the economic situation includes considering breaching the debt brake due to sluggish growth, allowing for a net borrowing of up to 0.35% of GDP.
3. The FDP faction has clarified that the debt brake will not be suspended, but the calculation for the allowed net credit increase will be adjusted to the worsened economic situation, potentially leading to a net borrowing of eleven billion euros in 2024.
4. The additional debt will be used to cover unexpected expenses, including additional costs for the citizen's allowance and federal defense aid, totalling around six billion euros.
5. The potential for the EEG surcharge in the KTF to add an additional nine billion euros due to the guaranteed feed-in tariff this year is also being considered, bringing the total potential debt to twenty-six billion euros.
6. The Federal Government's proposal for a supplementary budget and potential breach of the debt brake has drawn criticism from the Social Association Germany, with managing director Michaela Engelmeier accusing Christian Lindner and the Federal Ministry of Finance of misplacing priorities.

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