Breakthrough in budget talks between German government leaders
Published: Wednesday, Dec 13th 2023, 07:40
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According to the German Press Agency, the leaders of the German coalition government have reached an agreement on the federal budget for 2024. Details are to be announced during the course of the day, as dpa learned on Wednesday morning.
Almost four weeks after the ruling of the Federal Constitutional Court, a solution to the budget crisis that has put the government of the SPD, Greens and FDP under severe pressure has now been found. Chancellor Olaf Scholz (SPD), Vice-Chancellor Robert Habeck (Greens) and Finance Minister Christian Lindner (FDP) have since been discussing how to plug a 17 billion euro hole in the budget for the coming year. This government alliance is also known as the "traffic light" after the colors of the three parties involved.
It was also about how investments in climate protection and the modernization of the economy can be made possible despite the ruling. This is because there is a shortfall of 60 billion euros in the so-called climate and transformation fund, which had already been firmly planned for projects in the coming years. For the coming year alone, this amounts to 13 billion euros.
The judges in Karlsruhe had declared a reallocation in the 2021 budget null and void and ruled that the federal government may not set aside emergency loans for later years.
Bundestag resolution likely in January
On Tuesday morning, Scholz, Lindner and Habeck met again in the Chancellor's Office after they had repeatedly postponed their talks the night before. They later brought in the parliamentary group leaders of the governing parties, spoke in their own parliamentary groups and then withdrew to the Chancellery again in a small circle. In the end, an overnight meeting was obviously necessary. The agreement was reached early Wednesday morning.
The government actually wanted to pass the budget for 2024 before the end of the year, but it was already clear last week that this would no longer be possible due to the consultation times of the Bundestag and Bundesrat. Now, at least the Bundestag Budget Committee could possibly complete its deliberations before Christmas. However, this depends on how extensive the budget amendments proposed by the leading politicians are. In January, the Bundestag could then meet for the budget week and approve the budget, followed by the Bundesrat giving the green light.
A so-called provisional budget would apply for this period. For the time being, only expenditure that is necessary to maintain the administration and fulfill legal obligations is possible. In practice, however, the Ministry of Finance can authorize the ministries to use a percentage of the funds in the draft budget that has not yet been approved each month.
Debt brake? Saving? Details still open
It was not initially known what solution Scholz, Habeck and Lindner came up with. Among other things, the suspension of the debt brake for 2024 was discussed. The Basic Law allows higher borrowing in special emergencies. The SPD and Greens had argued that the war in Ukraine could be such an emergency.
It might then be possible to finance the aid payments for the country attacked by Russia via loans within narrow limits. Lindner has not yet been convinced. FDP parliamentary group leader Christian Dürr also emphasized on Tuesday that he did not see the legal requirements for declaring an emergency. The CDU/CSU is considering taking the matter to the Federal Constitutional Court again if the debt brake is suspended.
Tough austerity measures in various areas were also debated. Above all, the FDP wanted to review social benefits and certain subsidies. The planned increase in the citizen's allowance, for example, was controversial. The basic child protection scheme, which is due to start in 2025, could also be postponed further. Chancellor Scholz ruled out any cuts to social benefits - however, the SPD also said that it would be necessary to discuss the accuracy of benefits.
The Greens called for a reduction in climate-damaging subsidies, which they believe include tax breaks for diesel and agricultural and forestry businesses. This would provide the state with more revenue and therefore more leeway.
©Keystone/SDA
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