Table of contents
- What sums are involved in the 2024 budget?
- What will happen to the debt brake?
- Are there further measures on the revenue side?
- Where does the traffic light want to cut the core budget?
- What does this mean for consumers?
- What is changing with the KTF?
- What does this mean for the German economy?
- How is the opposition reacting to the Ampel plans?
- What will happen to the aid for Ukraine?
Questions and answers - Where the traffic light wants to make savings in the 2024 budget - and what this means for consumers
The agreement reached by the coalition leaders on the 2024 budget provides for massive savings in various areas in order to be able to comply with the debt brake despite gaps in the billions. Nevertheless, the German government intends to stick to its planned investments in the future, albeit with significant cutbacks. However, many details remained unclear after the initial statements by Chancellor Olaf Scholz (SPD), Vice-Chancellor Robert Habeck (Greens) and Finance Minister Christian Lindner (FDP).
The most important questions and answers at a glance:
What sums are involved in the 2024 budget?
Due to the ruling of the Federal Constitutional Court on the Climate and Transformation Fund(KTF) and its consequences, around 17 billion euros were missing from the core budget for 2024. In addition, there were around 13 billion euros in the KTF itself, which is used to support climate protection projects and the carbon-neutral transformation of the economy.
What is happening with the debt brake?
Despite the billion euro shortfall, the government intends to comply with the debt brake enshrined in the constitution again next year. However, an exception will be made in order to be able to continue to use the reconstruction fund due to the flooding disaster in the Ahr valley and other areas. 2.7 billion euros have been earmarked for this in the coming year.
Are there other measures on the revenue side?
The national CO2 price for areas not covered by European emissions trading is to be raised again from 2024 to the level originally planned by the grand coalition. This will be 45 euros per tonne of CO2 for 2024 and will primarily affect the transport and building sectors. Previously, an increase to 40 euros per tonne had been planned for 2024. The money will go to the KTF.
There is also talk of reducing climate-damaging subsidies to the tune of three billion euros. Of this, 1.4 billion euros are to be generated by payments for the EU plastic levy being paid by manufacturers or retailers instead of from the budget. Privatization revenues were also mentioned.
Where does the Ampel want to save on the core budget?
Cuts of 1.5 billion euros in the budget for labor and social affairs were mentioned. This is obviously at least partly about the savings hoped for by allowing refugees from Ukraine to find work more quickly. According to the Greens, there are to be no cuts to "social standards", including basic child protection. Savings in the transport and environment budgets were also mentioned. However, other areas are obviously also affected.
The reductions in income tax and electricity tax already planned for 2024 are not to be touched. The funds for the Growth Opportunities Act, which is currently on hold due to opposition from the Bundesrat, will also remain in the budget. Among other things, this involves tax relief for companies, particularly for investments in climate protection.
What does this mean for consumers?
One thing is now clear: many things will become more expensive and some state subsidies will be reduced or eliminated.
In particular, the coalition's plans to increase the price of CO2 will have an impact on consumers' wallets: Refueling and heating with fossil fuels will be more expensive than previously planned.
As the comparison portal Check24 has calculated, for a sample household with an annual consumption of 20,000 kilowatt hours, this will result in additional costs of around 20 euros per year for natural gas. Accordingly, with a CO2 price of 40 euros per tonne in the coming year, a total of 40 euros in additional costs could be expected. With the 45 euros per tonne now planned, the additional burden will rise to 60 euros compared to 2023.
The higher CO2 price also applies to heating oil. The comparison portal Verivox assumes annual additional costs of €96 for the increase from €30 to €45 per tonne of carbon dioxide. This calculation also applies to a household with an annual consumption of 20,000 kilowatt hours.
What is changing with the KTF?
According to Lindner, the Climate and Transformation Fund will have 12.7 billion euros less at its disposal for 2024 and, according to Scholz, the shortfall for the financial planning period up to 2027 will be 45 billion euros in total. This leaves the KTF with a volume of around 160 billion euros. This obviously includes the additional revenue from the higher CO2 price. Expenditure for the renovation of the railroads is now to be covered by the core budget instead of the KTF, apparently financed by privatization proceeds.
The federal government intends to maintain, at least in principle, programs financed from the KTF to promote the development of the hydrogen economy and the heating transition. According to Habeck, "all other central pillars" of the climate-friendly transition will also be retained.
However, funding for the reconstruction of the solar industry in Germany is to be cut. Subsidies for electric cars are to be phased out earlier than planned. Subsidies for relief from grid charges for electricity could also be discontinued. The possibility of the KTF receiving subsidies from the core budget will be reintroduced.
What does this mean for the German economy?
The German Chamber of Industry and Commerce has criticized the budget agreement. DIHK President Peter Adrian said that although it was not yet clear in detail, there were already some very critical points. "Above all, this includes the planned removal of the subsidy for network charges. This threatens to significantly increase electricity prices across the economy at the turn of the year - and from an already very high level." According to DIHK calculations, companies would have to pay up to twenty percent more for their electricity in 2024. "This is anything but a signal of a new beginning - neither for the economy nor for climate protection. That's why it makes sense to correct such important decisions again in the individual consultations that will now follow, despite the very short deadline."
Jörg Dittrich, President of the Skilled Crafts Association, is also calling for a more reliable policy from the traffic light. "The weeks-long backlog of decisions on the 2024 federal budget has led to strong skid marks in the economy instead of a double whammy of new beginnings and has further increased uncertainty," the President of the German Confederation of Skilled Crafts told the German Press Agency on Wednesday. "The feeling of reliability, which cannot be turned on and off like a switch, has been lost in many companies. The Federal Government is called upon to restore trust and reliability in the permanence of decisions." Germany cannot afford a backlog of decisions and actions on its path to the future.
In view of the agreement reached by the coalition leaders, employers' president Rainer Dulger speaks of a "pause for breath, but not a sustainable solution". Dulger said: "The good news is that a decision has been made and all political leaders have made compromises. Any non-decision would have been even worse for Germany as a business location and its jobs. However, sustainable structural reforms have once again been postponed."
How is the opposition reacting to the traffic light plans?
Union faction leader Friedrich Merz (CDU) accuses the coalition of cheating on the budget agreement. Contrary to Chancellor Olaf Scholz's presentation, it is already clear that the debt brake will have to be suspended again by the middle of next year at the latest, said Merz. "You know that you cannot keep to what you have said here today," said the opposition leader, addressing the Chancellor. It was the "usual trickery" of the Federal Chancellor.
Left-wing politician Dietmar Bartsch also complained of further uncertainties following the budget agreement. "We don't know anything for sure," Bartsch complained. "It really wasn't a political and communicative liberation, but a lot of half-baked announcements." At the same time, it was already clear to him that it was "an agreement on the backs of families, employees and pensioners". Bartsch referred to the increase in the CO2 price to finance climate protection projects.
AfD leader Tino Chrupalla also criticized the traffic light plans. A higher CO2 price would fuel inflation in the new year and further ruin the economy, said Chrupalla. Germany finally needs "a prosperity policy in the interests of its citizens". What is also needed is a cash audit.
What will happen to the aid for Ukraine?
The German government is maintaining its military and civilian support for Ukraine against the Russian war of aggression as planned. This includes eight billion euros for arms deliveries in the coming year. If the situation in Ukraine worsens - either militarily or because other supporting countries withdraw, Germany will step up its support. Another exception to the debt brake would then be made use of.
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- In the budget agreement, Robert Habeck, Olaf Scholz, and Christian Lindner aim to make substantial savings to comply with the debt brake, despite budget gaps in billions.
- Due to the Federal Constitutional Court's ruling on the Climate and Transformation Fund (KTF), the German government faces a 17 billion euro shortfall in the core budget for 2024.
- President of the DIHK, Peter Adrian, criticized the budget agreement, stating that it could significantly increase electricity prices for businesses, potentially amounting to twenty percent more in 2024.
- The German Chamber of Skilled Crafts, led by Jörg Dittrich, called for a more reliable policy from the traffic light to restore trust and reliability in the permanence of decisions.
- Tino Chrupalla, the leader of the Alternative for Germany (AfD), criticized the plans, claiming they would fuel inflation in 2024 and ruin the economy.
- Friedrich Merz, the Union faction leader, accused the coalition of cheating during the budget agreement, stating that they would have to suspend the debt brake again by mid-2024.
Source: www.stern.de
