2024-08-18 10:10:36
Dispute over federal budget 2025
Traffic light leaders agree at the last minute
Updated on 16.08.2024Reading time: 4 min.
The traffic light coalition has settled the dispute over the 2025 federal budget. The corresponding draft law is expected to be sent to the Bundestag and Bundesrat on Friday.
The leaders of the traffic light coalition have reached a new compromise on the federal budget for the coming year. This was announced by government spokesman Steffen Hebestreit. “The requirements of the debt brake in the Basic Law will continue to be complied with, and there will be no circumvention.” The agreement essentially provides for the reallocation of funds for the federally owned Deutsche Bahn.
This should clear the way for the draft budget law to be sent to the Bundestag and Bundesrat on time later today. The federal government decided on three changes compared to the original draft from the beginning of July. After the summer break, the so-called budget week will take place in the Bundestag, where the members of parliament will discuss the government draft. The draft had to be submitted by Friday so that they have enough time to read it. However, the budget is not expected to be finally approved until November.
According to the federal government, this will reduce the so-called global underspending by 4.5 billion euros to 12 billion euros. This is effectively a gap in the budget. The government assumes that this will be reduced further by economic development. However, Parliament now faces a relatively large task in its deliberations on the budget because the global overspending is significantly higher than usual. The traffic light coalition actually wanted to reduce this amount to under 10 billion euros.
Embed
The second change relates to Deutsche Bahn’s infrastructure division. According to the new draft, the division will receive 4.5 billion euros in additional equity. This will replace the originally planned subsidies of the same amount. In addition, there will be a loan of another three billion euros. So far, an equity increase of around 5.9 billion euros is planned for 2025, with which the railway will be able to make investments to renovate the dilapidated rail network.
In addition, EUR 9.1 billion in grants for investments are now available for the road sector. Of this, around EUR 4.6 billion comes from the revenue from truck tolls, which are allocated from the federal budget for the construction, maintenance and operation of motorways.
New negotiations were necessary
At the beginning of July, Chancellor Olaf Scholz (SPD), 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 close a gap of at least 30 billion euros. This should then have been achieved without overly harsh austerity measures.
In the draft presented in July, the federal government had planned a so-called reduced expenditure of 17 billion euros. The federal government assumes that the ministries will not spend all of the money in the year anyway – for example because projects are delayed. This approach is quite common, but the amount is very high.
Video | Dispute over the BSW: “A flawless representative of Russian propaganda”
This gap should therefore be closed, and should actually be around eight billion euros. In addition, there were orders to examine whether the railway and the motorway company should receive credit-financed loans instead of direct subsidies from the budget. Another issue was money from the state development bank KfW.
After the agreement, Lindner had already made it clear that there were legal and economic concerns as to whether all the projects envisaged for a solution could actually be implemented.
After two reports had partially confirmed the doubts, the coalition partners rejected the idea of using 4.9 billion euros from the KfW for other purposes in the budget instead of for the gas price cap.
There was also controversy over whether the railway and motorway companies could be supported without this having to be counted towards the debt brake. Lindner and Scholz had different opinions on this, which is why renegotiations have now taken place.