Coalition Government Has Reached An Agreement On The 2025 Budget

The coalition partners in Germany , made up of Chancellor Olaf Scholz ‘s Social Democrats , the Greens and the Liberals, reached an agreement on the 2025 budget on Thursday evening (4.07.2024), after weeks of negotiations, which includes respecting the debt brake and a package of measures to boost growth.

According to reports from the media on Friday, based on government sources, the agreement provides not only for the payment of the debt next year, but also for the medium-term financial plan, until 2028.

The leader of the Free Democratic Party (FDP) and Minister of Finance, Christian Lindner, had advocated compliance with the debt brake during the negotiations, which lasted for months.

The Social Democrats and Greens, on the other hand, had called for a further departure from this norm anchored in the Basic Law by referring to an emergency situation, in order to have more room for manoeuvre in terms of investments, especially in view of the burden resulting from the war in Ukraine.

Speaking to reporters this morning, the chairman of the Social Democrat parliamentary group, Rolf Mützenich, said he was satisfied that the coalition partners had “provided clarity in time, before the start of the summer break, that there is a budget” and the priorities with which it will be presented to the Bundestag, the lower house of the German parliament.

Mützenich took a dig at Lindner, saying that he found it “very unusual” that the chancellor had to involve all the ministers “at such an early stage” in order to achieve a budget, which, he added, “does not exactly speak in favour of the person who has direct responsibility” for its preparation, namely the finance minister.

Among the positive aspects for the Social Democratic Party (SPD), Müzenich highlighted agreements on child benefits, housing aid, pensions, the climate and transformation fund and the growth package.

“What people are interested in is whether the draft budget is designed to make their lives easier, or at least not more difficult, and this is apparently guaranteed,” he said.

Regarding the debt brake, he clarified that what his party and the Greens were demanding was not to suspend the debt brake, but to consider “an instrument that the debt brake provides for times that are not normal, and these are not normal times,” he said.

Following the budget agreement reached by Scholz, Lindner and the Vice-Chancellor and Minister for Economic Affairs and Climate, the Green Party member Robert Habeck, Mützenich expressed his hope that “the others are now prepared to discipline themselves” in view of what remains to be decided in the next 14 months of the legislative period.

CP (efe, afp, rtr)

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Benjamin Wallace-Wells

Benjamin Wallace-Wells is a staff writer at the The New Yorker since 2006. He worked for New York magazine, the Times Magazine, and Rolling Stone.

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