The debt brake will be suspended for the fourth consecutive year – that’s what Semaforo decided with its supplementary budget. The FDP is now calling for a strict budget – but the Greens warn against “saving the country from ruin”.
The cabinet approved the supplementary budget for 2023 and drew conclusions from the Constitutional Court’s far-reaching ruling in mid-November. The Karlsruhe court declared a loan reallocation worth €60 billion from the 2021 budget invalid. Since then, there has been a large gap in the federal budget.
Now, for the fourth year in a row, the federal government will take on more debt than is actually allowed and will have to lift the debt brake to do so. Instead of the 45 billion euros initially foreseen, there should now be around 70 billion euros in debt. For this to happen, the Bundestag must once again declare an exceptional emergency. This was supposed to happen in December.
According to the Portal news agency, which cites an internal government document, the final vote in the Bundestag is scheduled for December 13th, meaning the second vote in the Bundesrat will take place on December 15th.
Lindner justifies the change with the energy crisis
In his presentation, the Minister of Finance, Christian Lindner, refers to the energy crisis resulting from Russia’s war of aggression against Ukraine as justification for the measure. However, the increase in debt is not associated with higher expenses – on the contrary, the financing of the brakes on energy prices already paid is being adjusted to comply with the requirements of the Federal Constitutional Court. The two billion euros that were promised to hospitals for next year will also be guaranteed to face the energy crisis.
The supplementary budget also contains some updates: it takes into account that ministries spent a little less in the current year than planned. The interest item was also revised slightly downwards. Expenditure on planned stock pensions will be canceled for now – ten billion euros have actually been set aside for this. However, the traffic light coalition has not yet been able to agree on a legal basis for this.
Supplementary budget
A supplementary budget is a subsequent amendment to a budget that has already been approved by Parliament. The traffic light coalition now intends to legally guarantee loans that have already been used to reduce energy prices and support flood victims this year. It’s around 45 billion euros. The prerequisite for all this is that the Bundestag declares an extraordinary emergency and thus lifts the debt brake for the fourth time in a row.
Dürr: “The federal and state governments have a spending problem”
The question now is: what happens next? The FDP in the Bundestag wants to resolve the budget crisis through strict austerity measures. “The federal and state governments have a spending problem and savings are needed at this time,” said FDP parliamentary group leader Christian Dürr. “Saving is the order of the day.” From the FDP’s point of view, however, the debt brake should not be touched.
Even with the debt brake exemption for 2023, no additional debt would be incurred, Dürr said. It was a traffic light error not to have previously stopped the previously customary “reserve practice” in the budget, which has now been annulled by the Federal Constitutional Court.
Nouripour warns of “broken savings” in Germany
Given the tense budgetary situation, there is practically no scope for further spending. Green Party co-chair Omid Nouripour warned, however, against “broken austerity”. The country’s modernization must progress and Germany must not lose its competitiveness.
Regarding state limits on gas and electricity prices, Nouripour said: “It is certain that no facts will be created until we have a global solution together – and we are working on it.” Lindner announced that the relief measures would end at the end of the year. Green Party co-chair Ricarda Lang said all things were on the table. Climate and transformation fund projects would have to continue to be financed.
The Union keeps its options open
The Union announced that it would carefully examine the justification for the emergency and then decide how to vote in Parliament. “Regardless, I would not recommend taking legal action,” the deputy chairman of the parliamentary group, Mathias Middelberg, told the dpa news agency. The Union filed the first case with the Constitutional Court.
Giffey is pushing for a quick Prime Minister’s Conference
The budget crisis is also affecting the federal states. Berlin Senator for Economic Affairs Franziska Giffey called for another meeting between the federal and state governments. “We expect quick clarity on what happens next,” Giffey said after discussions with federal and state economic and energy ministers. “I made it clear that three things are now needed: trust, reliability and integrity.” A Prime Minister’s Conference is urgently and quickly needed to agree how to proceed. “The federal and state governments will have to work together and across parties to find solutions to the current serious and challenging situation.”
The prime minister’s next regular conference with Chancellor Olaf Scholz is not scheduled for June.
The Left wants a tax on assets above two percent
The Left Party also called for swift action: it renewed calls for a wealth tax, which, according to its own calculations, should yield up to 300 billion euros. This would burden private assets by more than two million euros and corporate assets by more than five million euros, said left-wing leader Janine Wissler. The tax must be designed “progressively”. This means that the larger the assets, the higher the tax. Wissler did not say exactly how much would be diverted.
The party also campaigned once again for the abolition of the debt brake in the Basic Law in order to be able to borrow more for investments, for example in education, rail transport or climate protection.
With information from Hans-Joachim Vieweger, studio ARD capital
Hans-Joachim Vieweger, ARD Berlin, tagesschau, November 27, 2023 2:00 pm