faq
Normally the federal budget is decided in December of the previous year. But this time billions in holes had to be filled first. What still needs to be clarified this week? An overview.
The year has long since begun, but what the state is allowed to spend and how much money has still not been officially decided. This week, the Bundestag wants to change that: the final discussions for the 2024 budget are coming up.
The budgets for each ministry are debated again for four days, and the federal government’s policies are discussed in the traditional general debate. The budget is then due to be passed on Friday – as is a law to implement austerity measures.
Why is everything happening so late this time?
Normally, the Bundestag approves the budget in December of the previous year. This time, however, the Federal Constitutional Court’s budget ruling thwarted the plans: in the short term, billions in holes had to be plugged in the core budget and in the climate and transformation fund.
The SPD, Greens and FDP fought over austerity measures for weeks, and it was only shortly before Christmas that a fundamental agreement was reached – and in mid-January there was a crucial meeting in the Bundestag’s budget committee.
Since the beginning of the year, the government has been working with a provisional budgetary approach: for the time being, only expenditure that is necessary to maintain administration and fulfill legal obligations is possible.
What are the key points of the budget?
After the crucial meeting in the budget committee, the budget is now essentially locked in place. Spending of 476.8 billion euros is planned. That’s around 5,635 euros per resident in Germany.
By far the largest budget is once again the social budget with expenditure of around 175.6 billion euros – large parts of which go to pension insurance, as well as expenditure on citizens’ money, for example.
Investments of 70.5 billion euros are planned this year – for example in the rail network and roads. The defense budget is around 52 billion euros, plus billions in funds from the “special fund” for the Bundeswehr.
The biggest savings compared to the previous year are in the Ministry of Health because many Corona expenses are eliminated.
Will the debt brake hold?
This cannot yet be said with certainty. Initially, new loans amounting to around 39 billion euros are planned. This would mean that the debt brake would be fully effective again after years of exceptions.
The federal government initially examined whether the exception rule should be used again for 2.7 billion euros in flood aid after the flood disaster in the Ahr Valley. The money now comes from surpluses in the 2023 budget.
The war in Ukraine remains a major source of uncertainty. What happens if Germany has to significantly increase its aid to Ukraine again – because developments at the front or the withdrawal of other states from the support alliance require this? The traffic light coalition reserves the right to claim an “extraordinary emergency situation” and to suspend the debt brake.
What is the most controversial cut?
The traffic light coalition wants to gradually abolish tax breaks for farmers on agricultural diesel. This caused a wave of protests from farmers who marched all the way to Berlin with their tractors.
The Federal Council does not have to agree to the cut, but could lodge an objection and appeal to the mediation committee on Friday. So far, however, there is no sign of a majority in favor of this, because in many states there are coalition governments with traffic light parties – and if a state government disagrees, the state must abstain from the Bundesrat or cannot agree.
What will be even more expensive?
Passengers will have to prepare for higher ticket prices from May. The traffic light coalition wants to increase the ticket tax that applies to all passengers taking off from German airports. From May onwards, depending on the flight distance, it will be 15.53 to 70.83 euros per passenger.
The airlines have to pay the surcharges, but they can pass them on to the passengers. The federal government expects additional tax revenue of around 400 million euros as a result.
What happens with citizen’s money?
Job centers should be allowed to cut off citizen’s benefit for unemployed people for a maximum of two months if those affected repeatedly refuse reasonable jobs. This should relieve the budget heading for citizens’ money by 150 million euros.
Improvements in the labor market integration of refugees, especially from Ukraine, through a “job turbo” should lead to lower spending of 500 million. However, it is uncertain whether this will work.
Where are there further cuts?
State funding for electric cars expired last year, significantly earlier than initially planned. There will also be cuts in cycling, so there will be no funding program for bicycle parking garages at train stations.
Savings should also be made in development cooperation and in subsidies for route prices – these are due for all railway companies that handle transport by rail.
Why is there more money for construction?
A funding program with a volume of one billion euros is intended to support the construction of small and affordable apartments, such as those needed by single parents and seniors. The program is extended until 2034.
The support should take the form of a reduction in interest rates. The rents should be in the lower third of the rent index. The construction sector is in crisis due, among other things, to increased interest rates.
What’s next?
After the budget negotiations is before the budget negotiations: Discussions for the 2025 budget are already underway. Things will not be easy for the traffic light coalition again, because there is once again a gap in the core budget alone in the lower double-digit billion range.
It is also controversial whether and when the coalition will make good on its promise to introduce climate money. This was actually intended to offset the additional burden caused by rising CO2 prices when refueling and heating with fossil fuels. Every citizen should get money back from the state. But that would cost billions.
Source: dpa