NewsGerman coalition resolves budget dispute amid rising uncertainties

German coalition resolves budget dispute amid rising uncertainties

Chancellor of Germany Olaf Scholz
Chancellor of Germany Olaf Scholz
Images source: © PAP | PAP/EPA/CHRISTIAN THIEL
Malwina Gadawa

6 July 2024 17:11

The dispute among the parties of the German governing coalition – SPD, Greens, and FDP – over the 2025 budget had been dragging on for months. However, an agreement has now been reached. "We are creating security and stability in times characterised by anxiety and uncertainty," said German Chancellor Olaf Scholz.

The uncertainty stems from the Russian aggression in Ukraine, climate change, irregular migration, and the rise in popularity of right-wing forces in Europe and Germany.

An agreement on the German budget

"From the beginning, my fundamental principle was to present a budget during these times that takes all these bases into account," Chancellor Olaf Scholz (SPD) said at a press conference with Vice Chancellor Robert Habeck (Greens) and Finance Minister Christian Lindner (FDP) after agreeing on the first key points of the budget.

The federal budget for 2025 plans total expenditures of £413 billion, and this year, the government is set to spend £420 billion.

Lindner emphasised that the German government plans to take on new debt of £38 billion next year and meet the debt brake requirements with a total budget of £413 billion.

The draft budget is expected to be approved by the government in mid-July. The first debate in the Bundestag is planned for mid-September, and the budget will be adopted in November or December.

Media comment

"Economics Minister Robert Habeck is right: this budget is not the centre of the world. However, for the governing coalition, the numerous meetings and hours during which negotiators and experts struggled with each other were nothing less than a matter of life and death," writes "Frankfurter Allgemeine Zeitung."

"By agreeing to the draft budget, the governing coalition averted the biggest conceivable catastrophe for itself, namely its breakdown. This was achieved at the cost of £38 billion in new debt, several accounting tricks, and a package of trust-building measures," argues Augsburger Allgemeine.

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