German government agrees on 2025 budget
The German government today agreed in principle on a draft budget for the coming year and a "growth package".
Commerzbank Economic Research
07/05/2024
After lengthy negotiations, Chancellor Scholz (Social Democrats), Economics Minister Habeck (Green Party) and Finance Minister Lindner (FDP) today reached an agreement in principle on the 2025 federal budget and a "growth package". The agreement comprises three parts: A supplementary budget for 2024, the rough key points for the 2025 federal budget and measures to boost the German economy.
Supplementary budget 2024: 11 billion euros in additional debt
The supplementary budget for the current year will allow the federal government to take on an additional 11.3 billion in debt. This is probably primarily due to the weaker economy and therefore lower tax revenues as well as higher expenditure, particularly for social assistance ("Bürgergeld"). In addition, there is higher expenditure from the Climate and Transformation Fund (KTF), which is incurred in particular for price guarantees for producers of renewable energies. According to the Minister of Finance, this higher borrowing is also compatible with the debt brake due to the weaker economy.
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