Berlin
After lengthy negotiations, the leaders of the traffic light coalition have achieved a breakthrough on the federal budget for 2025 and the growth package. The German Press Agency learned this from coalition circles after consultations with Chancellor Olaf Scholz (SPD), Finance Minister Christian Lindner (FDP) and Minister of Economic Affairs Robert Habeck (Greens).
The agreement on the federal budget for 2025 and the financial plan until 2028 stipulates that the debt brake will be observed, as the German Press Agency has learned from government circles. So there was no emergency.
Scholz, Habeck and Lindner met in the afternoon. The details of the agreement were initially unknown. At 7:00, the parliamentary groups of the SPD and the Greens will meet for meetings.
Coalition leaders under budget stress
Scholz, Habeck and Lindner had negotiated extensively in recent weeks. They actually wanted to reach an agreement on Wednesday. The cabinet decision will now be discussed on 17 July. In order to meet this deadline, an early agreement in principle was necessary, because drawing up the budget law usually takes about ten days. The work will be tackled from mid-September Bundestag with the draft budget, on which a decision could then be taken in November or December.
Billion Hole
That kind of separate departments Foreign office or the Ministry of Development initially refused to accept Lindner’s austerity plans in view of international obligations. The social budget was also controversial. In addition, there was a gap of around 10 billion euros that had to be filled. In view of the financial burden caused by the war in Ukraine, the SPD in particular insisted on suspending the debt brake again in order to create more room for investment. For Lindner’s FDP, this was out of the question. The SPD rejected cuts in the social budget.
Growth package
This year, only minimal growth is expected in Germany. Companies are holding back on investments, and private consumption is also not picking up. Trade associations have long complained about location-related disadvantages, such as high taxes and levies, a lack of skilled workers and too much bureaucracy.
Here the government wants to start with the ‘growth turbo’. Scholz had already said that the federal government wanted to promote private investment. He held out the prospect of better tax depreciation for companies. In addition, it must be made easier for parents to work and the incentives to work must be increased, also in the area of taxation.
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