Households in rapid succession: Current state of affairs

German Government Approves Controversial 2025 Budget

The German Budget Committee of the Bundestag has given its approval to the 2025 budget following a significant meeting, marking the first step towards its implementation. However, the budget has been met with criticism from various quarters, including the Green Party and the Left Party, who have raised concerns about its transparency and the methods used to balance the books.

The Green budgetary spokesman, Sebastian Schäfer, has labelled the budget as a "shunting yards and booking tricks" scheme. Similarly, Dietmar Bartsch of the Left Party described the 2025 budget as a "financial labyrinth." The opposition believes that no one fully understands the budget in its entirety anymore.

Chancellor Friedrich Merz (CDU) has set a savings target for Labor Minister Barbel Bas (SPD), requiring a ten percent, or five billion euros, reduction from the citizen's income. Finance Minister Lars Klingbeil, on the other hand, has announced plans to begin budget preparations for 2027, addressing a financing gap of over 30 billion euros. Klingbeil expects each ministry to submit savings proposals for one percent of its budget to plug the financing gaps for 2027.

Klingbeil has also indicated that legislative changes or cuts to existing entitlements, alongside potential tax increases on high earners and wealthy individuals, may be necessary to fill the budget gap. He has started working on the budget for 2027 months earlier than usual, and state secretaries of the ministries are expected to meet as early as September for the 2027 budget planning.

The 2025 budget, which includes additional funds for the Technical Relief Agency (THW) and the UN World Food Programme, has planned expenditures of around 502.5 billion euros. The budget is about 460 million euros less than originally planned by the government. The 2026 budget, which will apply for the entire year, has been decided in the cabinet and will go directly to the Bundestag for voting after the 2025 budget.

The budget for 2026, which includes cuts to development spending, will see increased spending, specifically 520.5 billion euros, and higher debt. The first debate for the 2026 budget is scheduled for the last week of September. The budgets for 2027, 2028, and 2029 have massive financing gaps: 34 billion euros are missing in 2027, the ministry has a "need for action" of 63.8 billion euros for 2028, and a gap of 74 billion euros for 2029.

Over the next four years, one billion euros will flow from the debt-financed special fund for infrastructure for the renovation of sports facilities in municipalities. The budget cleansing session for 2026 is expected to last until three or five in the morning, according to Dietmar Bartsch of the Left Party.

As the German government moves forward with its budget plans, it remains to be seen how these controversial measures will be received and whether they will successfully address the significant financing gaps facing the nation's budget in the coming years.