Parliamentary proceedings in Germany this week
Germany's Second Supplementary Budget Act 2021: A Response to Economic Challenges
The German government has proposed a second supplementary budget for 2021, amounting to 60 billion euros. This act, known as the Second Supplementary Budget Act 2021, is aimed at adjusting the federal budget in response to economic challenges, particularly those caused by the COVID-19 pandemic.
The original 2021 federal budget was set at €413.4 billion, with shifts in allocation due to pandemic response needs. Supplementary budgets like the second one serve to expand government spending authority beyond the original budget, specifically to address unforeseen economic disruptions and support targeted sectors or social programs affected by the pandemic.
Such supplementary budgets typically increase government borrowing or reallocate funds within the budget framework to boost stimulus efforts and social security measures that cushion individuals and businesses during economic downturns. While the exact figures for this Act were not found in the search results, it is expected that the act allowed Germany to increase expenditures on crisis response measures, including health, economic stabilization, and employment support.
The aim of the second supplementary budget is to catch up on investments in climate protection, boost the economy, and secure projects in the field of digitization. It also includes a focus on transforming livestock farming to make it more animal-friendly and developing a comprehensive food strategy that takes into account health, environment, social justice, and animal welfare.
The act will not increase the net credit intake for the year 2021. The government plans to examine how the direct payments of the EU's Common Agricultural Policy (CAP) can be adequately replaced by rewarding climate and environmental performance. The act also includes a 20-page appendix with additional indicators for sustainable prosperity and intergenerational fairness.
The further economic development will be significantly influenced by the course of the pandemic and geopolitical situation. Despite the ongoing impact of the pandemic on the service sector, retail, hospitality, and cultural industries, Germany recorded economic growth of 2.7 percent in 2021. By 2030, the German government aims to achieve 30 percent organic farming in Germany.
The German Bundestag has extended the state of emergency due to the COVID-19 pandemic, affecting both revenue and expenditure sides of the federal budget. The state measures taken so far are effective and necessary to alleviate the economic impacts of the pandemic. By the end of 2023, the pesticide glyphosate will be removed from the market in Germany.
The government aims to introduce a binding animal husbandry labeling by the end of 2022, covering transport and slaughter. The German Armed Forces will continue to combat IS terrorism and stabilize Iraq, with a mandate limit of 500 soldiers and extending until 31 October 2022.
The cabinet will decide on the Annual Economic Report 2022 on Wednesday. The prognosis for the end of 2022/beginning of 2023 is cautiously optimistic. However, higher public spending often results in increased public debt or deficits in the short to medium term, requiring future fiscal consolidation once recovery is underway.
The IS still poses a serious threat to the region, despite the destruction of their self-proclaimed "caliphate." Germany will continue to participate in the build-up of the regular Iraqi armed forces and provide staff personnel and capabilities for air refueling and ground-based airspace surveillance.
Sources: 1. Bundesregierung.de 2. Statista.com 3. Deutsche-Welle.com
The Second Supplementary Budget Act 2021, a response to economic challenges, has a focus on policy-and-legislation regarding war-and-conflicts, as the German Armed Forces will continue combat operations against IS in Iraq. General-news sources report on the economic implications of this Act, including increased public spending, potential deficits, and future fiscal consolidation, as well as investments in climate protection, digitization, and animal welfare.
