Three-Month government spending plan for 2025, denominated as the federal budget
The German government has unveiled its 2025 budget, which, along with its credit-financed shadow budgets, is set to be approved by the Bundestag on Thursday. This budget, totalling expenditures of 502.5 billion euros, includes significant investments in various sectors such as infrastructure, climate neutrality, and the Bundeswehr.
The infrastructure special fund will see a substantial allocation this year, with over 37 billion euros earmarked for spending. Of this amount, 2.5 billion euros will be used for the maintenance of motorway bridges, 1.5 billion for hospitals, and almost three billion for the expansion of broadband for better internet connections. Around 7.5 billion euros will be used for railway tracks.
The transport sector is expected to receive around 12 billion euros from the infrastructure special fund. The military sector, including support for Ukraine, will receive 75 billion euros in the core budget, of which 30 billion are debt-financed.
Finance Minister Lars Klingbeil, who prepared the federal budget law for 2025, has highlighted investments in infrastructure and digitalization as key to making the country more effective and capable. However, his work has been heavily criticized by the opposition.
MP Schwerdtner, on the other hand, has criticized the government for spending a large portion of the infrastructure and climate protection fund on consumer spending. He has also called for a wealth tax that would bring in 100 billion euros annually.
The budget foresees a core budget deficit of almost 82 billion euros. There are further new debt takings for the special funds for the Bundeswehr, infrastructure, and climate neutrality, amounting to around 58 billion euros.
The government coalition expects to close the budget without gaps for the coming year. However, there is currently a 'hole' of around 34 billion euros in the plan for 2027. A provisional budget management is currently in effect and will end with the enactment of the new budget.
The approval of the 2025 budget was significantly delayed due to the federal election and the subsequent change of government. The Bundestag is currently debating the plan for the 2026 budget, with a decision expected this year.
Economy Minister Middelberg sees potential savings in the social system, with a commission to reform it recently beginning its work. He also points to an investment share of over 20 percent in the budget, which he says will create new economic growth in Germany.
In conclusion, the 2025 budget presents a comprehensive plan for Germany's future, with significant investments in infrastructure, the military, and climate neutrality. However, the budget also faces criticism for its deficit and the allocation of funds, with the opposition calling for reforms and a wealth tax to address the financial gaps. The debate continues in the Bundestag as the budget awaits approval.
