German coalition resolves budget deadlock with CAD 87 billion debt
The dispute among the parties of the German governing coalition - SPD, Greens, and FDP - over the 2025 budget had been protracted for months. However, an agreement has finally been reached. "We are creating security and stability in times characterized by anxiety and uncertainty," said German Chancellor Olaf Scholz.
The uncertainty stems from the Russian aggression in Ukraine, climate change, irregular migration, and the rise in popularity of right-wing forces in Europe and Germany.
An agreement on the German budget
"From the beginning, my fundamental principle was to present a budget during these times that takes all these bases into account," Chancellor Olaf Scholz (SPD) said at a press conference with Vice Chancellor Robert Habeck (Greens) and Finance Minister Christian Lindner (FDP) after agreeing on the first key points of the budget.
The federal budget for 2025 plans total expenditures of approximately CAD 700 billion. This year, the federal government is set to spend around CAD 715 billion.
Lindner emphasized that the German government plans to take on new debt of around CAD 64 billion next year and, with a total budget of roughly CAD 700 billion, meet the debt brake requirements.
The draft budget is expected to be approved by the government in mid-July. The first debate in the Bundestag is planned for mid-September, and the budget will be adopted in November or December.
Media comment
"Economics Minister Robert Habeck is right: this budget is not the centre of the world. However, for the governing coalition, the numerous meetings and hours during which negotiators and experts struggled with each other were nothing less than a matter of life and death," writes "Frankfurter Allgemeine Zeitung."
"By agreeing to the draft budget, the governing coalition averted the biggest conceivable catastrophe for itself, namely its breakdown. This was achieved at the cost of CAD 64 billion in new debt, several accounting tricks, and a package of trust-building measures," argues Augsburger Allgemeine.
