Germany’s cabinet plans to approve a budget for 2025 after months of wrangling, hoping a strong economic recovery will help it close a €17 billion gap between projected spending and revenue.
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Next year’s budget, in particular, envisages a reduction in military aid to Ukraine to 4 billion euros from about 8 billion euros in 2024, Reuters reports.
The 2025 budget includes medium-term financial planning to 2028, when the special armed forces fund needed to meet NATO’s minimum spending targets is due to run out.
In 2028, the regular budget will have a deficit of 39 billion euros, and 28 billion euros will be needed to achieve NATO goals without a special fund, sources in the German Finance Ministry said. According to the sources, there will be a funding deficit of 13 billion euros in 2026 and 2027.
On July 8, Olaf Scholz announced the agreements on Germany’s budget for next year.
The chancellor then said that Germany’s defense budget would be increased to 80 billion euros. According to Scholz, this would help achieve NATO’s target of 2% of GDP in support of defense capability.
Vice Chancellor Robert Habeck, in turn, announced a new program for people who have been unemployed for a long time. Now they will “receive an additional bonus” when they find employment. At the same time, undeclared work, according to Habeck, will be prosecuted more harshly.
Finance Minister Christian Lindner announced the introduction of new tax breaks that will allow citizens to save around 23 billion euros in the coming years. In particular, the breaks will apply to qualified foreign workers in the first three years of their stay in Germany.
According to Habeck, the German government expects GDP growth next year to be around 0.5%.
Source: Racurs
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