Federal Finance Minister Christian Lindner has announced a long-term austerity plan. The federal budget for 2024 is only the beginning of consolidation efforts, said the FDP politician in Berlin.
His message: After spending more due to the corona pandemic and the energy crisis, the state must learn to get by with the money of the citizens again. Germany is the “gold standard” of state financing – and it should not be jeopardized under any circumstances. What that means:
Lindner’s crash barriers
The federal cabinet approved the government draft for the federal budget for 2024 and the financial plan up to 2027 – after months of negotiations in the coalition of SPD, Greens and FDP. The departments originally had requests for billions in additional spending. According to the draft, federal spending in the coming year should drop to 445.7 billion euros – more than 30 billion less than this year.
The new debt is expected to be 16.6 billion euros in 2024. This is intended to comply with the debt brake anchored in the Basic Law, which only provides for new debts to a very limited extent. The investments amount to 54.2 billion euros – a significant increase compared to the pre-crisis level, as Lindner emphasized.
According to the financial plan, net borrowing should fall to 15 billion euros by 2027 as part of the debt rule. “Our commitment to the debt brake over the entire financial planning period underlines that we want to remain the gold standard in state financing,” said Lindner. That is also a signal to the international capital markets. Germany has the highest credit rating.
Lindner again ruled out tax increases. This would be economically unwise, said Lindner, with a view to the high tax burden on German companies in an international comparison. He does not want to take the easiest route, said the finance minister. Expenses would have to be put to the test.
Difficult household times
All departments – apart from defense – already had to make savings for 2024 and 2025, totaling 3.5 billion euros per year. But that’s just the beginning, as Lindner made clear. The federal government’s interest expenditure has risen significantly, and a reserve worth billions built up in good times is almost gone.
“Unlike in the past, different political ideas cannot be covered up by using more and more money,” said Lindner. There is no longer any leeway that could be used for “distribution policy ideas” – unless they are linked to a proposal as to how they could be structurally financed in the long term.
The 2024 budget is just the beginning of a “trend reversal”. In the years 2025 to 2027 there is a budgetary “need for action” totaling 14.4 billion euros – this sum still has to be provided by the departments. Lindner rejected a possible access to the economic stabilization fund, from which the state energy price brakes are paid.
open questions
For example, it is still unclear how the planned basic child security is to be financed. From 2025 onwards, various family benefits are to be bundled and access and application simplified.
Eligible families should be better reached and children and young people at risk of poverty better supported. Lindner initially set two billion euros in the financial plan for 2025 as a “placeholder”. From the point of view of the Greens, this is clearly not enough, because there should also be improvements in performance.
Lindner now wants to wait for the draft law from Family Minister Lisa Paus (Greens). He emphasized that there must be structural counter-financing for structural additional expenditure in the long term. And: basic child security is not the only important project of the coalition – the finance minister sees a planned “investment premium for climate-friendly technology”, which is aimed at companies, and investments in the railway infrastructure as being of equal importance.
In the case of the railways, it is unclear whether and how an additional requirement of 45 billion euros should be financed by 2027 in order to reduce an investment backlog and to renovate the rail network – so that trains are more punctual.
The last word may not yet have been spoken on the planned, controversial parental allowance cap for high-income earners. Lindner indicated that the plans currently available could still be changed during the upcoming deliberations in the Bundestag. There seems to have been some new need for advice on parental allowance, he said, referring to the public criticism of the plans.
Rising CO2 prices?
The Climate and Transformation Fund (KTF) – a special fund outside the actual budget – plays a key role in projects for the transformation towards climate neutrality. It is fed, among other things, from income from fuel emissions trading – a CO2 price is due for fossil fuels in transport and heating. Many projects are to be financed from the KTF, such as the state subsidy for replacing the heating system.
The digital media house Table.Media reported that the CO2 price should rise more sharply on January 1, 2024 than currently planned. From the current 30 euros per ton, it should not climb to 35 euros, as is currently planned, but to 45 euros. That would mean: refueling and heating would be more expensive than previously planned.
Lindner said there was no corresponding agreement and no resolution. However, the cabinet proposal mentions a “change in certificate prices” from 2024, which will be decided at a later date.
2023-07-05 18:42:22
#Coalition #threatened #hard #fights #money
