Germany: coalition finally passes 2025 budget

Written by David Fletcher 18 Jul 2024
Germany: coalition finally passes 2025 budget

The German cabinet has at last approved its 2025 budget after months of wrangling, despite a €17 billion shortfall between projected spending and revenue. Finance minister Christian Lindner stated that innovative measures and stronger growth from a new economic package should generate an additional €6 billion next year. The budget includes record investments of €78 billion, net borrowing of €43.8 billion, and a total size of €481 billion. The country aims to boost its economy by over 0.5% in 2025. Lindner defended the budget's legality and fiscal prudence despite analysts’ concerns. Military aid to Ukraine will be reduced next year, as Ukraine is expected to secure $50 billion in loans from the G7. Germany was the worst performing major economy last year, with gross domestic product contracting by 0.3%. It pulled out of recession early this year, but growth has been slower than expected. Reaching agreement on the budget has been a major test for a coalition often accused of being hobbled by internal disagreements.

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