Budget Drama in Germany: Passing the 2024 Budget Now a Challenge
It looks like Germany's 2024 budget won't be approved this year. According to sources from ntv, the Bundestag won't hold a special session for this purpose, although negotiations for a political agreement should ideally wrap up by year's end.
The failure to pass the budget is a result of the Federal Constitutional Court's ruling regarding compliance with the debt brake. This ruling means that the coalition government, made up of the SPD, Greens, and FDP, can no longer push through the 2024 budget during the current year. And why is that? Well, the Budget Committee can't process an adjustment bill in time for a special Bundestag session that could have been passed before the year's end.
However, a clean-up meeting for the Bundestag is planned for the week before Christmas. A revised budget could then be passed in the second week of January, following approval from the Bundesrat. Until then, provisional budget management will be in place, requiring the Finance Minister to okay previously unagreed expenditures by the federal ministries individually.
The budget shortfall, amounting to around 17 billion euros, appears around the 2024 budget. This is because the federal government had to adopt a supplementary budget for the current year in response to the debt brake ruling, which resulted in reduced budgetary flexibility for the following year. Federal Chancellor Olaf Scholz, Finance Minister Christian Lindner, and Economics Minister Robert Habeck are currently engaged in negotiations aimed at closing this gap. They're not only focusing on the core budget but also discussing the climate and transformation fund. The Federal Constitutional Court's nullification of 60 billion euros in credit authorizations, intended for the KTF, has led to a 12-billion-euro deficit in the planned expenditure for the next year.
Relevant Insights
- The Federal Constitutional Court's ruling against debt brake compliance in November 2023 had a major impact on the German government's spending capabilities.
- The coalition government's budget disputes, arising from differing views on defense, infrastructure, and social spending, led to its collapse in November 2024.
- Recent elections have left the country without a finalized budget, and the snap elections scheduled for February 2025 will provide further clarity on Germany's budgetary future.
