Federal budget 2025: Scholz, Habeck and Lindner struggle to reach agreement on the budget

The SPD is pushing, the FDP does not want to be pressured: whether it concerns the traffic light negotiations on the Budget 2025 until an agreement is reached on Friday, remains completely open. Chancellor Olaf Scholz (SPD), Vice Chancellor Robert Habeck (Greens) and Finance Minister Christian Lindner (FDP) met in the Chancellery in the afternoon for another of the numerous rounds of negotiations over the past few months.

Shortly before midnight, the negotiations were still ongoing according to coalition circles. It will be over by Friday morning shortly before 7:00 at the latest. Then the SPD and Green factions will meet for special meetings to find out more about the status of the discussions. That is probably also the case
Scholz and Habeck are participating. According to information from the dpa news agency, the FDP will simultaneously provide digital information to members of parliament.

The SPD faction had already scheduled the special meeting for Wednesday. On the last day of the meeting before the parliamentary summer break, the MPs wanted clarity.

Lindner pressure for a quick agreement rejected. “We have to advise carefully. It is about the stability of our state finances in a turbulent world situation,” said the FDP politician.

Negotiations are also underway on a package of measures to tackle the vulnerable Economy to get started. The Chancellor calls it a “growth turbo.” He had called previous aid packages “Wumms” or “Bazooka.”

Scholz, Habeck and Lindner actually wanted to reach an agreement last Wednesday. The cabinet decision will now be discussed on 17 July. In order to meet this deadline, an agreement in principle is needed as soon as possible, because the drafting of the budget law usually takes about ten days. From mid-September, the Bundestag will then deal with the draft budget, which could then be decided on in November or December.

Dispute over social budget and debt brake

The individual budgets have reportedly been largely negotiated; the social budget in particular is still controversial. In addition, a gap of around 10 billion euros still needs to be filled. The SPD In light of the financial burdens brought about by the war in Ukraine, he advocates suspending the debt brake again, so that more room is created for investment. For Lindner’s FDP, this is out of the question. The SPD rejects cuts in the social budget.

It is also about possible cuts to the climate and transformation fund – financed from this special pot Federal government Projects for more Protection of the climateAs a result of a ruling by the Federal Constitutional Court, billions are missing from the pot.

Scholz did not discuss the budget negotiations at the ceremony marking the 75th anniversary of the founding of the Association of Municipal Corporations in Berlin. In his speech, he generally called for more trust in Germany. “Trust is the driving force of modernity,” he said. Germany achieves a lot, especially in difficult times. “All this with calm reliability.”

The finance minister expressed caution. “There is still a lot of work to be done,” Lindner said at an event in his ministry. “Our country does not lack money, but often simply lacks the courage to set priorities.”

Lindner again spoke out in favor of cuts in social spending. Since 2022, there have been 15 billion euros more social spending due to the expansion of benefits and the introduction of new benefits alone. The finance minister mentioned the direct child benefit, the expansion of the rent allowance and the Deutschlandticket for local and regional transport at a price of 49 euros per month. Lindner also said that in the course of the “economic turnaround” and an activation on the labor market, there must also be “unavoidable” measures regarding citizens’ money.

The social associations warned against this. “That would only fuel the divisions in society, and we can see where that can lead with the election results in France,” SoVD chair Michaela Engelmeier told the newspapers of the Funke media group. VdK chair Verena Bentele stated: “Many people are dissatisfied and restless. Cuts in the social sector would only add fuel to the fire.”

The youth organisations of the SPD and the Greens also made their opposition to cuts in the social sector clear. “A budget of cuts is extremely dangerous in the current situation,” warned Juso chairman Philipp Türmer starHis Green Party colleague Svenja Appuhn demanded in the same magazine: “The Greens must not agree to this budget agreement if cuts are again made at the expense of the weakest and poorest.”

The offspring of coalition partner FDP and opposition party Union are opposing this. “Make a firm commitment to maintain the debt brake in the budget negotiations and show the courage to set clear priorities,” reads a letter to the three bosses, signed by, among others, July boss Franziska Brandmann and JU boss Johannes Winkel. Mirror reported. “Our future and the future of future generations depend on it.”

The chairman of the German Chamber of Industry and Commerce (DIHK), Peter Adrian, called for structural reforms: “We get more money into the state coffers through growth, not through debt or even higher charges, especially for the economy,” he said. Funke. The general conditions in Germany are currently not good for the economy: “Too high costs, too much bureaucracy, too long and analog procedures with outdated infrastructure,” Adrian said.

Only slight growth is expected

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.

In the context of negotiations on the 2025 federal budget and a growth package, the federal government is expected to launch a supplementary budget for this year as well. This would give it more financial flexibility. Because the economy in Germany is weaker than expected, the economic component in the Debt brake a larger net debt. This could amount to eleven billion euros. So far, a net loan of 39 billion euros has been planned for the current year as part of the debt brake.