German Chancellor Olaf Scholz and his finance and economy ministers reached a preliminary deal on the draft budget for 2025, Politico reported.
This allowed them to avoid a government meltdown. Scholz’s three-party coalition government had been arguing for months over whether to loosen Germany‘s constitutional debt brake limiting deficit spending.
The alliance’s two left-wing parties, the Social Democrats (SPD) and the Greens, were in favour of loosening the spending restrictions. In contrast, the conservative Free Democrats (FDP) insisted on maintaining strict spending rules, according to Carina Konrad, the FDP’s deputy parliamentary group leader.
I believe that this is a good sign for stability in our country, that the federal government is showing the ability to act and that a budget that complies with the constitution will be presented.
The three coalition leaders, Scholz, Economy Minister Robert Habeck, and Finance Minister Christian Lindner, agreed not to violate the debt brake. Instead, they relied on an accounting sleight of hand to prioritise government spending. For instance, the parties agreed not to include the purchase of dozens of battle tanks in the 2025 budget, shifting the responsibility to the next government.
After a disastrous European election result for the three-party coalition, which together won only 31 per cent of the vote, the survival of the Scholz government depends largely on whether the parties can finalise an agreement on the 2025 budget without major clashes.
Government leaders are due to provide more details on the tentative agreement on Friday.
