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According to information from the German Press Agency, the leaders of the German governing coalition have reached an agreement on the federal budget for 2024. Details will be announced later in the day, the dpa learned on Wednesday morning.

Almost four weeks after the ruling of the Federal Constitutional Court, there is a solution to the budget crisis that has put great pressure on the government consisting of the SPD, the Greens and the FDP. Chancellor Olaf Scholz (SPD), Vice Chancellor Robert Habeck (Greens) and Finance Minister Christian Lindner (FDP) have since discussed how to close a 17 billion euro hole in the budget for the coming year. This government alliance is also called the ‘traffic light’, after the colors of the three parties involved.

It also discussed how investments in climate protection and the modernization of the economy can be made possible despite the ruling. 60 billion euros are missing from the so-called climate and transformation fund, which was already heavily planning projects for the coming years. For the coming year alone, this amounts to 13 billion euros.

The Karlsruhe judges had declared a redistribution of the 2021 budget invalid and decided that the federal government could not reserve emergency loans for later years.

Decision of the Bundestag probably in January

On Tuesday morning, Scholz, Lindner and Habeck met again in the chancellery, after postponing their conversation again the evening before. Later they called in the parliamentary faction leaders of the government parties, spoke in their parliamentary groups themselves and then withdrew in a small circle to the chancellery. Ultimately, a night session was of course necessary. The agreement was reached early Wednesday morning.

The cabinet actually wanted to approve the budget for 2024 before the end of the year, but last week it became clear that this would no longer be possible due to consultation moments in the Bundestag and the Bundesrat. Now the Bundestag Budget Committee could at least complete its deliberations before Christmas. However, that depends on how extensive the budget changes proposed by top politicians are. In January, the Bundestag could meet for budget week and decide on the budget, after which the Bundesrat could give the green light.

For that period, so-called provisional budget management would apply. Then, for the time being, only the expenses necessary to keep the administration and meet legal obligations are possible. In practice, however, the Ministry of Finance can authorize ministries to use a monthly percentage of the resources from the not yet approved draft budget.

Debt brake? To rescue? Details remain open

It was initially unknown what solution Scholz, Habeck and Lindner arrived at. Discussions included the idea of ​​suspending the debt brake before 2024. The Basic Law allows higher loans in special emergency situations. The SPD and the Greens had argued that such an emergency could be caused by the war in Ukraine.

It was initially unknown what solution Scholz, Habeck and Lindner arrived at. Discussions included the idea of ​​suspending the debt brake before 2024. The Basic Law allows higher loans in special emergency situations. The SPD and the Greens had argued that such an emergency could be caused by the war in Ukraine.

It could then be possible to use loans to finance limited aid payments for the country attacked by Russia. Lindner hasn’t been convinced lately. FDP faction leader Christian Dürr also emphasized on Tuesday that he did not see the legal requirements for declaring a state of emergency. The Union is considering returning to the Federal Constitutional Court if the debt brake is suspended.

There was also talk of tough cuts in various areas. The FDP mainly wanted to review social benefits and certain subsidies. For example, the planned increase in citizens’ money was controversial. Basic child benefit, which will come into effect in 2025, could also be further postponed. Chancellor Scholz ruled out cutting social benefits, but at the same time the SPD said that we should talk about the appropriateness of benefits.

The Greens called for a reduction in climate-damaging subsidies, which they say include tax breaks for diesel and agricultural and forestry companies. That would provide the state with more income and therefore more room for maneuver. (sda/dpa)