Critics of the Merz administration argue that funds for care and infrastructure are being saved, resulting in a financial benefit for the rich.
The German federal government has unveiled its 2025 budget draft, outlining substantial investments in social infrastructure and broader initiatives to stimulate economic growth.
In the social sector, the budget allocates a significant 190 billion euros to the social security and pension system, marking an 8% increase from 2024. This substantial investment reflects the government's commitment to supporting its aging population. Notably, 20 billion euros is earmarked for housing construction until 2028, with a record 3.5 billion euros dedicated to social housing. Housing benefit payments (Wohngeld) are set to increase by 15% in 2025. However, the healthcare system will receive less funding, with 16.4 billion euros allocated in 2025 compared to 16.7 billion euros in 2024.
Beyond social infrastructure, Germany is investing heavily in broader infrastructure initiatives. A €500 billion infrastructure fund will be deployed over twelve years to modernize the country's infrastructure, exempt from traditional debt constraints. The defense budget is also expected to more than double by 2029, reaching €152.8 billion, reflecting increased security concerns.
However, the VdK, an advocacy group for social welfare and pension rights, has expressed criticisms towards these investment plans. The VdK President, Verena Bentele, has emphasized the need for a well-designed special fund and demands more investment in social care, such as in nursing homes. The VdK specifically advocates for a wealth tax and reduction of privileges for the rich, specifically targeting the group of ultra-wealthy with a financial wealth of over 100 million dollars.
Ms. Bentele criticizes the planned reduction of corporation tax, arguing that it could potentially harm poorer people. She states that Germany cannot meet future financial challenges if all people are not fairly involved in the state's expenses. The VdK Germany has also criticized shortcomings in crucial areas of the budget draft.
The 500-billion-euro special fund for infrastructure and climate protection, decided in March, aims to provide billions in funds that municipalities can invest in the renovation of schools or hospitals. The German government, under Merz, hopes for a long-term economic upswing with these measures.
This news article provides an overview of the German budget draft 2025, focusing on social infrastructure investments and broader economic growth initiatives. The VdK's criticisms, particularly regarding the distribution of funds and the need for a wealth tax, have also been highlighted.
In light of Germany's 2025 budget draft focusing on infrastructure and economic growth, the VdK advocacy group suggests a need for greater investment in social care, such as nursing homes. Moreover, the VdK especially supports the implementation of a wealth tax, aiming to reduce privileges for the rich, particularly the ultra-wealthy with over 100 million dollars in financial wealth.
