Germany's plan to meet its defense commitments to Western allies is being jeopardized by budget infighting within the country's governing coalition. Chancellor Olaf Scholz announced a 100-billion-euro special fund to bring the military back up to speed, allowing Berlin to meet the 2% target over the next three years. However, there is uncertainty about how to achieve the spending goal once the fund is exhausted in 2028. Germany's military top brass has warned that additional funds are needed now to ensure combat readiness in five years. The coalition government is struggling to find the money to comply with the NATO target due to self-imposed rules that limit state borrowing. Defence Minister Boris Pistorius has called for an increase in annual defense spending next year by 6.7 billion euros, but the decision has been postponed until after the 2025 election. The defense industry argues that Germany's failure to meet the NATO target has created a need for greater investment now. The defense industry association estimates that an additional 100 billion euros will be needed by 2028 to address gaps in the military's inventory. The chancellery has suggested that defense officials engage with arms makers to start producing weapons for the Bundeswehr at their own cost and without a contract, accepting delayed payment until 2028. The outcome of the budget dispute will be seen as a test of politicians' commitment to a transformative defense upgrade.
Germany's coalition government, consisting of Chancellor Olaf Scholz's Social Democrats (SPD), the Greens, and the liberal FDP, is locked in a dispute over the 2025 budget. FDP Finance Minister Christian Lindner is demanding close to 30 billion euros in savings, which the Greens and SPD have opposed. The budget discussions have lasted longer than usual, and experts warn that this stalemate could lead to the collapse of the coalition. The parties have until July 3 to reach a compromise. The dispute is centered around unemployment benefits, with Lindner wanting to restrict current payouts, while the SPD wants to improve benefits. There is also disagreement regarding measures affecting diplomacy and defense. The coalition is concerned about their levels of support after performing poorly in the recent EU elections. The finance ministry predicts that tax revenues for 2025 will be 11 billion euros lower than originally forecasted. The coalition is also limited in new spending due to a ruling by the country's top court in November that they had contravened the constitutionally enshrined 'debt brake.' Despite calls for the debt rules to be relaxed, Lindner and the FDP refuse to consider any changes. The parties are set to meet on Sunday to attempt to make progress and prevent a crisis of confidence that could lead to new elections.
In the midst of the budget negotiations, Chancellor Olaf Scholz stated in a television interview that the coalition government will stick to its social agenda and reconcile that with military aid to Ukraine. Scholz emphasized the importance of defending and developing the welfare state while adhering to self-imposed rules that limit state borrowing. He also expressed support for Ukraine and a tougher stance against people on social benefits who refuse to work or work illegally on the side. Scholz's comments come after the far-right Alternative for Germany (AfD) scored 16% in the recent European Parliament elections, while support for the SPD fell to 13.9%, its worst result in postwar Germany. [ef18e3a1]
The German government, led by Chancellor Olaf Scholz, has reached an agreement on the 2025 budget and a stimulus package for the country's economy. The budget plan involves repurposing 60 billion euros in unused COVID-19 emergency funds. The resolution concluded a prolonged dispute within Scholz's center-left coalition involving the Social Democrats, Free Democrats, and Greens. The agreement was reached after extensive negotiations and earlier legal challenges against repurposing the emergency funds. This budget agreement averts a crisis that could have led to the collapse of the coalition government. [ce4ecfdd]