BERLIN — Germany’s ruling coalition will not manage to have a 2024 budget in place before the end of this year, a senior lawmaker from Chancellor Olaf Scholz’s Social Democratic Party (SPD) said Thursday.
The admission by Bundestag member Katja Mast underscores the degree to which Germany’s ruling coalition is struggling to deal with the consequences of a top court ruling last month that sparked a severe political and fiscal crisis.
The EU’s largest economy faces a prolonged fiscal standstill as the government looks for a way to plug an estimated €17 billion gap in the 2024 budget. Even if the three-party coalition manages to agree on a draft budget in the coming days, Mast said, there will not be enough time to get the required parliamentary approval before year’s end.
“Although we have done everything we can on our side, the budget for 2024 can no longer be adopted in time this year,” Mast wrote in a text message to fellow SPD lawmakers leaked to German media.
The failure to finalize a 2024 budget means the government will have to start next year with a temporary budget that freezes new spending. Essential services like social benefits and pensions will still be paid out, but other payments — including subsidies for the green transition, microchips and batteries — would remain on hold.
Germany’s ruling coalition — made up of the SPD, the Greens, and the Free Democrats (FDP) — has been in disarray since the bombshell court ruling blew a €60 billion hole in its finances. The ruling also limited the government’s ability to draw money from special funds that had been set up to circumvent the Germany’s constitutional debt brake, which strictly limits deficit spending.
Pressure is mounting on Scholz, Economy Minister Robert Habeck and Finance Minister Christian Lindner — each representing ruling parties with often contradictory priorities — to swiftly agree a budget deal that can be adopted by the German parliament in early January.
A government spokesperson expressed optimism on Wednesday that a draft budget would be agreed this year. But the government’s inability to reach a budget agreement to date underscores the deep rifts within the coalition.
The Greens and the SPD wish to maintain subsidies, such as those to accelerate the clean energy transition and to promote the construction of microchip and battery factories in Germany. The fiscally conservative FDP, led by Lindner, is skeptical of such spending.
“I am not convinced in the medium and long term that Germany can secure its competitiveness, prosperity and social security through subsidies,” Lindner said in a recent interview with the Wirtschaftswoche magazine.
