It could be the traffic light coalition’s biggest test to date: The budget for the coming year is about cuts and not wish lists. The arena is open.
The summer holiday lethargy in Berlin’s government district these days is deceptive. Behind the scenes, what can safely be called an ordeal has begun. It’s about many billions, the federal budget for the 2025 election year. And it’s about the survival of the traffic light coalition.
The federal ministries had until today to submit their applications for next year’s budget to Finance Minister Christian Lindner. The FDP leader’s requirements are strict: almost all of his cabinet colleagues should save. The Ministry of Finance wants to keep what the houses actually submitted secret for as long as possible. But one thing already seems clear: several of Lindner’s colleagues are not adhering to the guidelines and are complaining about more or less significant additional needs instead of suggestions for savings.
Lindner has to fill a billion-dollar gap
At the beginning of March, the Finance Minister made it clear that things should actually be different this year. This time there is no additional money to distribute, but rather a “need for action,” he said. We shouldn’t talk about wish lists, but about savings and cuts lists.
There is a huge gap in the budget planning for the coming year. Some say 15 billion, others say 25 or even more billion. The war in Ukraine, the sluggish economic situation, and also the ruling of the Federal Constitutional Court, which last year cut billions from a special pot for climate protection, are having an impact.
Why the 2025 budget is so important
Austerity budgets are always difficult – but especially when it comes to the budget for an election year. Because what you don’t spend money on now probably can’t be implemented before the 2025 federal election. This applies to basic child security as well as to the planned pension reform, climate protection projects and transport projects. And that can cost votes.
Lindner had already predicted in March that his cabinet colleagues would not pull together with him under this pressure. “If the registrations do not meet the department-specific upper limits, they cannot be accepted,” he explained at the time. What exactly that means will be seen in the coming weeks.
Coalition partners expect difficult discussions
First, Lindner wants to take stock of the registrations with Chancellor Olaf Scholz (SPD) and Vice Chancellor Robert Habeck (Greens). The core question: How many billions are you above target – and who has to pay for it? Habeck describes the negotiations as demanding. “They were last year too. But the financial gap was smaller,” he said at the beginning of the week. Consolidation means that people either get less money – or have to pay more.
In the distribution battles between the ministries, everyone is trying to “take the easy way out for themselves,” said FDP householder Otto Fricke on Deutschlandfunk. The fear in the cabinet: Whoever flinches first and gives Lindner his little finger could quickly lose his entire hand.
Federal Interior Minister Nancy Faeser (SPD), for example, says that security is not an area in which savings can be made. The federal government must neither reduce its commitment to limiting irregular migration nor neglect integration. In view of Russian aggression in Europe, investments in both security authorities and civil defense are unavoidable. Faeser recently emphasized that she knew “that the Federal Minister of Finance is aware of the importance of internal security.”
FDP parliamentary group leader Christian Dürr once again demonstratively called on the traffic light cabinet on Thursday to “stick to the consolidation course that Chancellor Scholz and ministers Lindner and Habeck have jointly agreed on.”
What was already leaking out
Lindner wants to use the medium-term financial planning already decided in the cabinet as the basis for his budget. Accordingly, the Foreign Ministry and the Development Ministry would have to cope with major cuts. As was previously heard, both ministers do not want to accept this.
Foreign Minister Annalena Baerbock (Greens) would have to make do with around 5 billion euros instead of more than 6 billion euros – despite the wars in Ukraine and Gaza, where a lot of humanitarian aid is needed. According to reports, Baerbock is now entering the negotiations with a demand of around 7.3 billion – of which almost a billion is to support Ukraine.
Development Minister Svenja Schulze (SPD) is also not happy with Lindner’s guidelines. In a recent interview with “taz” she pointed out the geostrategic importance of development cooperation. “Where the West retreats, Russia moves in.” Defense Minister Boris Pistorius (SPD) has already demanded an additional 6.5 billion euros.
Where the money could come from
Scholz, Habeck and Lindner shouldn’t disagree with more money for the Bundeswehr and Ukraine. But the package to support the weak economy – keyword “economic turnaround” – that has been widely announced by the economics and finance ministers for weeks must also be financed. Where will the money come from? Probably not about a reform or exception to the debt brake – because in this debate the fronts between the Greens and SPD on the one hand and the FDP on the other remain hardened.
The tax estimate on May 16th is unlikely to offer much relief this time, as the poor economy is slowly starting to have an impact on tax revenue. Because of the weak economic forecast, Lindner can plan for a little more debt, but even that is just a drop in the ocean.
Now, according to reports, the finance minister has dug out a list that his ministry made last year. According to “Handelsblatt” it contains 21 subsidies worth 9 billion euros, which, according to the Ministry of Finance, could be abolished because of their dubious effect. According to the report, Lindner’s officials question the tax exemption for Sunday, public holiday and night surcharges. On May Day, however, Lindner assured X: “No one is planning that.” At the turn of the year, the traffic light only experienced how quickly one can earn the concentrated anger of citizens because of subsidy cuts during the farmers’ protests.
Union: Budget is becoming a question of fate for the traffic light
Union faction deputy Mathias Middelberg sees the negotiations on the federal budget for 2025 as a “question of fate” for the traffic light coalition. “It’s not just about missing billions, but fundamentally about whether this government manages to change course and really restructure the budget in order to tackle the new tasks in the areas of economic growth and defense,” Middelberg told the German Press Agency.
So far, new challenges have been dealt with through new debts. Now it remains to be seen whether the FDP can assert its demands for real savings.
How things can continue
Actually, the government leaders Scholz, Habeck and Lindner must be keen to get this year’s budget through without public blows and speculation about a break in the coalition. Too much trust was lost in the last negotiations, after which many citizens denied the traffic light’s ability to govern. But observers agree: the struggle for billions and political principles could really push the coalition to its limits this time.