Weekly Updates from German Federal Parliament (Bundestag)
Germany Approves Second Supplementary Budget for 2021, Focusing on Climate Protection and Economic Recovery
The German government has approved a Second Supplementary Budget for 2021, amounting to 60 billion euros. The budget, a part of the government's response to the COVID-19 pandemic, aims to catch up on investments in climate protection that were not made due to the pandemic, boost the economy, and secure projects in the field of digitization.
The initial Supplementary Budget, suspended the constitutional debt brake to allow additional borrowing of around 156 billion euros. The investment planned under this budget focused on containing the economic fallout from the pandemic and included economic support measures totaling about 130 billion euros by late 2021, divided roughly into 60 billion euros in subsidies and 55 billion euros in loans.
Social benefits related to employment support schemes such as Kurzarbeit (short-time work allowance) received about 42 billion euros in 2020 and 2021. Broader measures to support consumption and investment were also implemented, recognizing that the economic loss from the pandemic could reach up to 350 billion euros, with recovery expected to take years.
The budget was essential to preserving economic stability and supporting growth during the crisis by funding emergency programs and maintaining employment. The supplementary budget aimed to bridge the immediate fiscal gap caused by the pandemic and set the foundation for recovery investments.
A significant portion of the Second Supplementary Budget will be dedicated to climate protection measures and economic transformation. To facilitate the implementation of full-day care for students, starting from 2026, the federal government has set up a special fund of 3.5 billion euros. The extension of the Economic Stabilization Fund was also made possible, with the deadline extended to 30 April 2022, allowing large companies to continue receiving state funds beyond the end of the year.
The extension aims to provide conditions for large companies to continue receiving state funds, ensuring planning security for private investments. The funding pots for the Economic Stabilization Fund will be reduced, as the available funds are far from exhausted.
A corresponding proposal by SPD, Alliance 90/The Greens, and FDP to retain the adjustment procedure for the 20th legislative period is being discussed this week. Under current law, the Bundestag must decide on the continuation of the adjustment procedure for members' allowances at the start of each legislative period by a simple majority vote.
The Government Bill for the Second Supplementary Budget is being discussed in second and third reading this week. A motion from the SPD, Alliance 90/The Greens, and FDP is being discussed regarding the continuation of the adjustment procedure for members' allowances. Companies now have until 30 April 2022 to apply for the Economic Stabilization Fund.
The extension of the Economic Stabilization Fund until the end of June 2022 was made possible due to the EU Commission extending the temporary framework for state aid until the end of June 2022 in November. The deadline for calling up these funds was initially 31 December, but has now been extended by one year due to unforeseen consequences of the corona pandemic and the flood disaster.
- The Second Supplementary Budget for 2021, focusing on climate protection and economic recovery, will also impact the finance and business sectors as they receive significant funding.
- The German government's political decision to extend the Economic Stabilization Fund until the end of June 2022 aims to support large companies in the industry, providing planning security for private investments.
- General-news reporters might cover the ongoing discussion in the Bundestag about the continuation of the adjustment procedure for members' allowances, which could have repercussions for the political landscape and budget planning.
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