Traffic light agrees to the solution

Leah./(dpa) Leaders of the Traffic Light Alliance have reached an agreement on the federal budget for 2024. Debt curbs will be committed again next year, Chancellor Olaf Scholz (SPD) told the press in Berlin on Wednesday. He appeared before the media with Vice-Chancellor Robert Habeck (Green Party) and Finance Minister Christian Lindner (Free Democratic Party).

Schulz said the necessary savings came primarily through cuts in climate-harming subsidies, through cuts in federal support and through spending cuts by individual ministries. Overall, the missing 17 billion need to be saved. Schultz emphasized: “The government is sticking to its goals.” The priorities are support for Ukraine, climate protection and social security.

Nearly four weeks after the Federal Constitutional Court ruling, there is a solution to the budget crisis that has put the traffic-light government under great pressure. Since then, Scholz, Habeck and Lindner (FDP) have discussed how to fill financial gaps in next year’s budget.

Karlsruhe judges had declared the reallocation in the 2021 budget null and void, and decided that the federal government was not allowed to reserve emergency loans for later years.

In the run-up to the agreement, the main focus was on how to make investments in climate protection and modernizing the economy possible despite the ruling. There is a shortfall of €60 billion in the so-called Climate and Transition Fund, which already has projects firmly planned for the next few years. Next year alone, this amount will reach 13 billion euros.

Finance Minister Christian Lindner described the agreement as a clear signal that the coalition is “capable of moving and reaching an agreement” despite the difficult tasks. Olaf Schulz spoke of trustful, confidential and constructive discussions.

Bundestag decision probably in January

On Tuesday morning, Schulz, Lindner and Habeck met again at the Chancellery, having postponed their conversation again the night before. They later brought in the leaders of the traffic light platoons, spoke to their platoons themselves and then retreated back to the Chancellery in a small circle. In the end, it was clear that an overnight session was necessary. The agreement came early Wednesday morning.

The Traffic Light government actually wanted to pass the 2024 budget before the end of the year, but it was already clear last week that this would not be possible due to consultation times in the Bundestag and Bundesrat. Now, at least, the Bundestag Budget Committee is likely to complete its deliberations before Christmas. However, this depends on how extensive the changes proposed by senior politicians are in the budget. In January, the Bundestag could meet for budget week and decide the budget, after which the Federal Council could give the green light.

The so-called temporary budget management will be implemented for a long period. Hence, at present, only expenditures necessary to maintain management and fulfill legal obligations are allowed. However, in practice, the Ministry of Finance can authorize ministries to use a percentage of funds in the draft budget that has not yet been approved each month.