The German government plans to approve the 2025 budget this Wednesday after months of wrangling, hoping that the economic recovery will help it close the 17 billion euro gap between projected spending and revenue.
The eurozone's largest economy avoided recession at the beginning of the year, but growth turned out to be slower than expected, and the cabinet of Olaf Scholz, like the governments of Great Britain and France, is struggling to plug the budget hole, Reuters reports today, July 17.
The 2025 budget contains medium-term financial planning until 2028, when the special fund of the Bundeswehr, necessary to achieve the minimum spending goals of NATO, should be exhausted. A year before the federal elections, reaching an agreement on the budget and a long-awaited package of measures to stimulate the economy has become a serious test for the ruling coalition, which is often accused of being hampered by internal disagreements, the London edition notes.
In the European elections in June, the parties in the German coalition government performed poorly: the far-right Alternative for Germany took second place after the Conservatives.
A few days after the outbreak of the armed conflict on In Ukraine in 2022, Chancellor Scholz announced the Zeitenwende (German for "historic turning point"), which provides for the creation of a special fund in the amount of € 100 billion to modernize the Bundeswehr and achieve the NATO benchmark for defense spending equivalent to 2% of gross domestic product. In 2028, there will be a deficit of € 39 billion in the regular budget, and € 28 billion will be needed to achieve the NATO goal without a special fund, sources in the German Finance Ministry told the British news agency.
According to them, a funding shortfall of €13 billion is expected in 2026 and 2027.
It is further indicated that the federal budget of Europe's largest economy next year will be much less generous for Ukraine: the Scholz government will reduce military assistance to this country to € 4 billion from about € 8 billion in 2024, according to the draft budget, which was reviewed by Reuters.
The German government also plans to adopt on Wednesday an additional budget for the current year with new borrowings in the amount of € 11 billion, bringing the total net borrowings to € 50.3 billion.
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