German Parliament Approves Budget for 2025
The German government has approved its budget for 2025, with total expenditures of around 502.5 billion euros. The coalition government, formed by the Union (CDU/CSU) and the SPD, aims to address a significant budget gap for 2027 through savings, reforms, and possible tax adjustments.
One of the most notable aspects of the budget is the significant increase in defense spending. The military will receive a substantial boost, with the defense budget increasing to around 62 billion euros in 2025. This increase is due to the tense geopolitical situation.
The budget also includes a special fund of 500 billion euros for additional investments over a period of twelve years. This fund will be allocated for projects such as the renovation of bridges and railway tracks, energy infrastructure and digitization, hospital funding, research and development, sports facilities, construction projects, and education. Notably, 100 billion euros will go to the Climate and Transformation Fund for climate protection projects.
The transport ministry's budget is the largest investment budget, with around 23.7 billion euros earmarked for investments in the core budget, and an additional 11.7 billion euros from the special fund for infrastructure.
However, the budget has not been without controversy. The opposition parties have criticized the use of the special fund, stating that the investments planned by the Union and SPD offer too little future perspective. The Green and Left parties have accused the federal government of cheating in budget planning instead of investing.
Federal Chancellor Friedrich Merz (CDU) has acknowledged the challenges ahead, speaking of a "difficult task" to explain austerity measures to the citizens, as debates on tax increases and social reforms have already begun. The AfD, on the other hand, has demanded fewer debts, proposing to cut climate projects, EU contributions, and arms deliveries to Ukraine.
It's worth noting that around 52 billion euros is planned for unemployment benefits, including almost 30 billion euros for the citizen's income. The budget for work and social affairs is the largest expenditure item, with more than a third of the federal budget, around 190 billion euros. Pension insurance receives 122.5 billion euros in the budget for work and social affairs.
The new borrowing for the 2025 budget is expected to reach around 143 billion euros. The coalition has not taken the AfD's budget proposal seriously, as it is only in effect for a short period. The government aims to boost the economy with multi-billion-euro investments, but a financing gap of over 30 billion euros is expected as early as 2027.
In conclusion, the 2025 budget presents a significant shift in spending, with a focus on defense, infrastructure, and climate protection. However, the budget has been met with criticism from opposition parties and the public, raising questions about the long-term sustainability of the government's financial plans.
