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BERLIN — German Chancellor Olaf Scholz and his finance and economy ministers have reached a preliminary deal on a draft budget for 2025, dodging a government meltdown.
Scholz’s three-party coalition government was at loggerheads for months over the question of whether to relax Germany’s constitutional debt brake, which limits deficit spending, with the alliance’s two left-leaning parties — the Social Democrats (SPD) and the Greens — favoring a loosening of spending restrictions, while the fiscally conservative Free Democrats (FDP) pushed to maintain strict spending rules.
“I believe that this is a good sign for stability in our country, that the federal government is showing the ability to act and that a budget that complies with the constitution will be presented,” said Carina Konrad, the FDP’s deputy parliamentary group leader.
After an all-night negotiation, the three coalition leaders — Scholz, Economy Minister Robert Habeck and Finance Minister Christian Lindner — agreed not to violate the debt brake, relying instead on an accounting sleight of hand to fulfill the government’s spending priorities. For example, the parties agreed not to account for the purchase of dozens of battle tanks on the 2025 budget, pushing that liability onto the next government.
Following the calamitous European election result for the three parties in the coalition, which together mustered only 31 percent of the vote, the survival of Scholz’s government largely depends on whether the parties can finalize the 2025 budget deal without a major clash.
Government leaders are expected to provide more details on the preliminary agreement in the course of Friday.
