Expert opinion casts doubt on German government’s 2025 budget plans – report

A draft agreement on a budget for 2025 by the German coalition government might have to be re-opened after advisors to the finance ministry (BMF) found that it might violate constitutional checks on government spending, reports the Süddeutsche Zeitung. Finance minister Christian Lindner, from the pro-business Free Democrats (FDP), commissioned an expert opinion to prevent the government’s budget plans from running into legal challenges. His choice comes on the back of a momentous decision by the country’s highest court in late 2023 when it declared billions of euros earmarked for climate action and energy transition projects as unlawful. “This means that the controversial debate about money that paralysed the Social Democrats (SPD), the Green Party and the FDP over many months and caused a huge rift between the coalition partners could come back in full force,” the newspaper said.

The experts commissioned by treasurer Lindner said that the draft agreement’s plans to close a remaining funding gap of about 17 billion euros could once again violate constitutional rules: With measures such as rededicating nearly five billion euros in unused funds for gas price caps, the government must clearly distinguish between long-term and emergency expenditures. The plan to provide the country’s state-owned motorway management company, Autobahn GmbH, with a loan bears substantial legal risks, as the company does not generate its own income and is therefore not entitled to take on debt. In a similar vein, a loan provided to railway company Deutsche Bahn might be considered unlawful, since the company already has high debt which makes timely repayment questionable. The SPD, party of chancellor Olaf Scholz, has stated that the gaps could be filled if the government declares another emergency based on the ongoing Russian war on Ukraine, but finance minister Lindner has signalled that he would reject such a step and plans to stick to the country’s controversial debt brake – the constitutional limit on new government borrowing.

At the release of its budget plans in July, the cabinet of chancellor Scholz said the agreement included “record” investments in climate and transformation efforts. The draft budget has been passed on to parliament’s budget committee and a final decision on the funding plans is due only in November.