analysis
Tough night meetings in the coalition that lasted hours are over for now. The 2024 budget should now be in place, the government has not broken up. But every party has taken a hit – and it’s getting more expensive for consumers.
Finance Minister Lindner begins his statement about the weeks of budget negotiations with jokes about loneliness. He, Economics Minister Habeck and Chancellor Scholz were not “lonely” – the three of them sat together for nights, calculated and discussed a solution. Lindner’s joke was a reference to the federal government’s loneliness study, which was presented at a press conference at almost the same time. Economics Minister Habeck and the Chancellor weren’t in the mood for jokes after the many nights, and you could see that on their faces.
Cuts in renewable energy
Although the budget agreement was able to avoid a feared end to the coalition, it hurts all parties at some point – no one made a secret of it. The Greens must save on the expansion of renewable energies, for example in aid for the solar industry. Economics Minister Habeck says quite frankly how much this hurts him – and that’s just one example he gives. What consequences the compromise will have for further funding from the Climate and Transformation Fund (KTF) is currently being kept silent. The Chancellor later explains in his government statement that tasks in the Climate and Transformation Fund will now be re-prioritized – this will lead to a lot of discussions.
Debt brake not suspended for 2024 – for now
The coalition agrees on financial aid for Ukraine and the commitment stands. However, if the situation there worsens, a reaction will have to be made, the Chancellor announced. This means that if countries like the USA reduce their aid or other support stops, an emergency could be declared later because Germany would then have to send more money. Something that the finance minister probably wouldn’t like, but he probably had to swallow this compromise because this emergency isn’t there yet. The finance minister also has to swallow the dismantling of climate-damaging subsidies; this alone is expected to save three billion.
It remains questionable what will happen with 2.7 billion euros from the flood relief fund after the Ahr Valley disaster in 2021. Declaring an emergency for 2024 is still being examined and they want to approach the Union about this, it was said. A great template for opposition leader Friedrich Merz, who is already accusing the federal government of once again cheating on the budget.
Welfare state will not be dismantled – but prices will rise
The SPD is relieved that there will now be no radical cuts to the welfare state. Only the bonus program in citizens’ money will be canceled and sanctions will be tightened. However, many of the measures announced will now lead to higher costs for many consumers. The CO2 price is increasing faster than planned, which means more expensive refueling and heating with fossil fuels.
In addition, the state subsidy for network fees will no longer apply. This means that the network operators will pass on the higher electricity costs to their customers.
And flying could also become more expensive. A kerosene tax for domestic German flights is being discussed as part of the 2024 budget – the German aviation industry is already up in arms against it.
The agreement on the budget is now only a first step; further debates about reforming the debt brake, relief for consumers and a lack of support for the economy will follow.