Federal Government
Deadline not met: Traffic light coalition continues to struggle over budget
For weeks they have been trying to fill a double-digit billion gap in the budget planning for 2025: Christian Lindner, Robert Habeck and Olaf Scholz (from left to right). Photo
© Kay Nietfeld/dpa
The budget for 2025 was supposed to be ready next week – but the traffic light coalition is still arguing. A party colleague of the Chancellor is slowly losing patience.
In the struggle over the federal budget for the coming year, the traffic light coalition leadership cannot meet its previous target date. Government circles are no longer expecting a cabinet decision on July 3. According to information from the German Press Agency, the target date is now July 17. This would mean that the deadline for submitting the draft to the Bundestag could still be met.
Chancellor Olaf Scholz (SPD), Vice Chancellor Robert Habeck (Greens) and Finance Minister Christian Lindner (FDP) has been trying for weeks to plug a double-digit billion gap in the budget planning for 2025. Previously, Lindner had not made any progress with the specialist ministers alone, as they did not want to adhere to savings targets. An agreement is urgent, as the draft must also be discussed in detail in the Bundestag after the cabinet. It is expected to be adopted there in December.
But there is not much time left for a cabinet decision in mid-July either – because the experts in the Finance Ministry need around two weeks to translate a political agreement into a draft ready for adoption. This political agreement, which the negotiators currently seem far away from, would therefore have to be achieved this week or next week.
The Finance Ministry only said that discussions were ongoing and that a political agreement and a cabinet decision were being sought “in July”. Scholz had also indicated flexibility in the timetable on Monday. The draft should be approved “in July”, he also said.
Mützenich puts pressure on negotiators
SPD parliamentary group leader Rolf Mützenich put pressure on the negotiators. He expected Scholz “to make clear political statements next week at the latest, together with the Vice Chancellor and the Finance Minister, about what this budget looks like,” Mützenich said before a parliamentary group meeting.
Green Party leader Katharina Dröge countered speculation that the traffic light coalition could collapse over the dispute over the budget. “It’s not a question of a week now, the Finance Ministry must decide what the timetables are realistically possible,” she said. But citizens want clarity, which is why an agreement in July is important.
The debt brake must also be discussed in the budget discussions, stressed Dröge. From the Greens’ point of view, important criteria are investments to strengthen the economy, and climate protection must be promoted and the welfare state secured. The SPD parliamentary group is also advocating for more investments and an exception to the debt brake.
Criticism from the Union
Union budget officer Christian Haase warned that Germany was in danger of losing face on the international stage. “Internal and external security are in danger, the economy has hit the wall and the traffic light coalition continues to promote social romanticism and green ideology,” he criticized. Foreign Minister Annalena Baerbock stressed that Germany could lose international reputation if it made cuts, for example in humanitarian aid.
At the Industry Day in Berlin, Lindner explained that it was not about a budget cut, but about shifting priorities. Education, investments, stimulating purchasing power and competitiveness, and strengthening internal and external security were important.
The coalition is planning a “dynamization package” to stimulate growth. Scholz said on Monday that he could imagine “going even further in terms of depreciation and research funding.” In addition, voluntary, longer working hours should be made significantly more attractive.
Lindner: “Boldly switch from redistribution to investment”
Economics Minister Habeck, on the other hand, has abandoned the debt-financed “special fund” he himself proposed to stimulate the ailing economy for this election period. The idea could, however, become a reality after the federal election, he said. “But I am relatively certain that this debate will gain a lot of momentum in the next federal election, will almost become dominant and will also lead to a result,” said Habeck.
Lindner, on the other hand, is of the opinion that such a special fund would not be compatible with European fiscal rules. “There is no getting around the fact that we must courageously switch from redistribution to investment,” he said.
The Federation of German Industries (BDI) estimates the state’s investment needs for the next ten years – excluding the power grid and energy – at 400 billion euros. In terms of financing, the BDI also considers new debt to be justifiable, provided the federal government consolidates the actual federal budget and initiates structural reforms.