The federal budget for 2024 is on hold for the time being
Published: Wednesday, Nov 22nd 2023, 20:10
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The Karlsruhe budget ruling poses three fundamental problems for the traffic light coalition: How can the budget for the current year be made legally secure retrospectively? Can the Bundestag approve the budget for the coming year at all? And what about the important investments in climate protection and a modern economy? The SPD, Greens and FDP gave a provisional answer to at least one question on Wednesday: The budget for 2024 will not be decided next week. However, the CDU/CSU is calling for a swift government statement from Chancellor Olaf Scholz (SPD) on the budget crisis.
Scholz expects the budget for 2024 to be passed quickly. "Respect for parliament means that it is not the government that announces exactly when parliament will reach a conclusion, but it should be done very quickly and very promptly and it can be done quickly and promptly," he said at a press conference in Berlin on Wednesday evening on the fringes of a meeting with the Italian head of government, Giorgia Meloni. Scholz emphasized that the government factions were determined to ensure that what had been planned could be pursued further. Specifically, he spoke of the further development of the welfare state, the modernization of the economy and ecological transformation.
The ruling of the Federal Constitutional Court last Wednesday must be carefully taken into account when drawing up the budget, the parliamentary group leaders jointly justified the rejection. The budget week in the Bundestag, during which every single budget was to be voted on for hours over four days, will not take place. Instead, parliament is to discuss other issues.
Budget decision unlikely before the end of the year
"Our aim is to discuss the budget swiftly but with due care in order to create planning certainty," explained Rolf Mützenich (SPD), Britta Hasselmann and Katharina Dröge (Greens) and Christian Dürr (FDP). Whether the budget can still be passed before the end of the year is written in the stars. Theoretically, this would be possible, as there is still a regular session of the Bundestag and the Bundesrat could grant a deadline reduction. However, there is talk from the traffic light coalition that a decision in December will be difficult.
Because too many questions have not yet been decided. Should high prices for electricity and gas also be cushioned in the coming year? To do so, the housekeepers would have to make several billion euros available in the budget, as the special fund for the energy price brakes, the "double whammy" fed with loans of over 200 billion euros, can no longer be used according to initial assessments.
It is also unclear whether projects from the climate and transformation fund should be transferred to the core budget. This fund for investments in climate protection and other future projects is lacking 60 billion euros following the ruling of the Constitutional Court. The court had declared the reallocation of these loans, which were actually approved to combat the coronavirus, null and void.
Continued government possible without a budget for the time being
If there is no federal budget at the beginning of the year, so-called provisional budget management applies. 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 unapproved draft budget each month.
This procedure has already been practiced in the German government, as it usually also applies after a general election if the new government is unable to draw up its own budget in the short time between forming a coalition and the turn of the year. However, it is controversial whether the official increase of four billion euros in aid for Ukraine, which has not yet been decided, will be able to take effect.
No decision on the budget for the current year
For the time being, the coalition partners have no answer to the second fundamental question raised by the ruling. If they do not come up with an answer, the budget for the current year could also be in breach of the constitution. This is because the Constitutional Court ruled that the state may not reserve emergency loans for later years.
However, according to experts, this is exactly what the federal government did in the energy price brakes fund: in 2022, the Bundestag declared an emergency due to the war in Ukraine, suspended the debt brake and approved loans of 200 billion euros. Only part of the funds were used in 2022 - the rest was to flow in 2023 and 2024. 37 billion euros were spent this year - money that the federal government should probably not have used.
The traffic light coalition must now legally secure these loans. This could, it is said, be done by once again deciding on an emergency situation - on the grounds, for example, that the effects of the energy crisis were still being felt at the beginning of 2023. The debt brake exception rule could then be used again.
Baden-Württemberg's Finance Minister Danyal Bayaz (Greens) spoke out in favor of this on the news portal t-online. "The crisis year 2022 is still close, we are still feeling the consequences of high energy prices and inflation," he said. "We are in a recession, gross domestic product is falling. That justifies the emergency, as many experts also see it."
Reforming the debt brake for climate protection projects?
Whether and how the projects planned in the climate and transformation fund should be implemented is also a matter of controversy within the coalition. It is not only about climate protection projects, but also about billions for the establishment of modern chip factories, the development towards a climate-neutral economy and the reduction of electricity prices for citizens and companies. Because they consider these investments to be essential, economists are calling for a reform of the debt brake. Former German Finance Minister Peer Steinbrück also spoke out in favor of this. "There must be a debt brake, but the current one is clearly no longer fit for purpose," he told Die Zeit. There is an extreme need for investment in various fields.
The CDU/CSU, on the other hand, is ruling out changes to the debt brake enshrined in the German constitution. The CDU and CSU would not go along with this, the first parliamentary group leader Thorsten Frei told Redaktionsnetzwerk Deutschland. The debt brake is essential for intergenerational budget management. Faction leader Friedrich Merz suggested doing without basic child protection, the heating law and a higher citizen's income. "Not everything is possible anymore," he said on the ARD talk show "Maischberger".
The CDU/CSU is demanding a swift government statement from Chancellor Scholz on the current budget crisis. "The budget and coalition crisis threatens to turn into a crisis of confidence in our state's ability to act," reads a letter from Frei, Parliamentary Secretary of the CDU/CSU parliamentary group, to Wolfgang Schmidt (SPD), Head of the Chancellor's Office, which was made available to the Deutsche Presse-Agentur (dpa) in Berlin on Wednesday. "To avert this, we finally need clarity and truth from the Federal Government." After the next Bundestag session was convened for November 28, the CDU/CSU parliamentary group suggested using this date to issue a government statement, Frei wrote. Left-wing parliamentary group leader Dietmar Bartsch called on Scholz to inform the public in a televised speech about "how he intends to pull the cart out of the mire".
©Keystone/SDA
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