German parliament approves budget for 2025
The German Bundestag has approved a special fund of 500 billion euros for investments over a period of 12 years, with the aim to make Germany safer, more modern, and competitive. The budget, yet to receive full parliamentary approval before Christmas, is planned at around 520 billion euros, with significant investments in infrastructure, digitalization, innovation, and a clear consolidation course.
One of the key areas of investment is the climate and transformation fund, which will receive 100 billion euros for climate protection projects. However, the Green and Left parties have accused the federal government of trickery in budget planning, instead of investing sufficiently in these areas.
Defense spending is set to increase significantly due to the tense international political situation. Additional billion-dollar loans from special funds for the military and infrastructure are planned. The AfD, on the other hand, has proposed cutting climate projects, EU contributions, and arms deliveries to Ukraine to reduce the amount of debt incurred.
More than a third of the federal budget, around 190 billion euros, is allocated to work and social affairs. Of this, around 52 billion euros are planned for unemployment benefits, including nearly 30 billion euros for the citizen's income. A substantial 122.5 billion euros are allocated to the pension insurance.
By 2027, there will be a financing gap of more than 30 billion euros. Chancellor Friedrich Merz has spoken of a "difficult task" in communicating austerity measures to the citizens. Debates over tax increases and social reforms have already begun.
The budget aims to stimulate the economy with multi-billion-euro investments. The investments are aimed at renovating infrastructure, expanding energy and digitalization, improving hospitals, research and development, sports facilities, construction projects, and education.
Former Bundestag member Sahra Wagenknecht has warned that the sharply increasing arms expenditures threaten social peace. The new federal government's budget plans for a net credit intake of almost 82 billion euros in the core budget.
It's important to note that the budget is only valid for a few months, providing planning security only until the end of the year. The federal budget for 2025 has already been approved, amounting to approximately 502.5 billion euros. The new debt is expected to rise to around 143 billion euros, a level last seen during the corona crisis.
As the budget approval process continues, it remains to be seen how these plans will unfold and what compromises, if any, will be made. The approval is expected shortly before Christmas, and the German government will face the task of communicating these austere measures to its citizens in the coming months.
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