After many months of coalition disputes and fierce negotiations, the German government approved the draft budget bill for next year on Wednesday (17.07.24). It assumes spending of 480.6 billion euroabout EUR 8 billion less than this year. The state is to borrow in 2025. new debts of 43.8 billion euros. The budget anchor limiting the state's debt is to be maintained. At the same time, Olaf Scholz's government also adopted a package to stimulate the economy, which is expected to grow only minimally this year.
The initial budget agreement, worked out earlier this month by the coalition leaders, has already stirred up a lot of controversy. The main reason for criticism is lower than expected defense spending. However, on Wednesday, Finance Minister Christian Lindner of the liberal FDP defended the project, arguing that it is the “beginning of an economic turnaround” for Germany.
To save the economy
– Our growth initiative is an important economic policy impulse to make Germany an attractive location for business – he said. He added that “greater room for maneuver” in the state budget will only be possible with higher economic growth. This, in turn, requires strengthening competitiveness and innovation, he added.
The plans include easing the burden on companies, including faster depreciation for investments, extending the research allowance, reducing reporting obligations under the Supply Chain Act and reducing bureaucracy. The government also wants to relieve energy-intensive sectors of the economy that have been hit hardest by the growth costs energy.
Employees are to be encouraged to work more and longer by being exempt from tax and contributions salaries for overtime. Tax incentives for qualified foreign workers are also provided, as well as relief for company electric cars.
The package was estimated to bring an additional 0.5 percent of GDP growth next year, or €26 billion.
Less support for Ukraine
In turn, recipients of the citizen's income, i.e. benefits for job seekers, are to be subject to more stringent rules. According to the draft budget, child benefit (Kindergeld) is to increase by five euros from 1 January 2025. The child allowance for needy families, currently amounting to 20 euros per month, is to increase by the same amount. Investments in day care facilities for children are also planned.
More money will go to the Ministry of Defence next year – EUR 53.25 billion, which is EUR 1.3 billion more than this year. However, this is significantly below the expectations of Defence Minister Boris Pistorius, who counted on an increase in his budget by over EUR 6 billion. During the parliamentary work on the budget bill, attempts will probably be made to introduce changes in this area.
The German government has earmarked EUR 4 billion for support for Ukraine next year, which is half as much as in 2024, when EUR 8 billion was made available for this purpose.
The German Bundestag will probably vote on the budget bill only in November this year. (DPA/ widz)
The article comes from the website German Welle