Agreement on 2025 budget and growth initiative

“With this budget we are providing security and stability in times of unrest and insecurity,” said Federal Chancellor Olaf Scholz on Friday, following consultations with Federal Minister for Economic Affairs Robert Habeck and Federal Finance Minister Christian Lindner.

After the talks it was clear what the general outline of the government’s draft budget for 2025 looked like and that the debt limit would be observed. In addition, a supplementary budget worth 11 billion euros was drafted for 2024, and a growth initiative designed to boost economic growth is to be launched. The budgetary priorities are as follows: greater internal and external security, societal cohesion, tax relief for citizens and businesses, ambitious climate action and greater economic growth.

•  Security in a narrow sense: Strong defence capabilities and strong Federal Armed Forces are essential. Germany is going to fully comply with Nato’s two-percent target every year. From 2028 onwards, after the funds for the special scheme have been spent, the regular defence budget will be 80 billion euros. Furthermore, more money will be spent on security for towns and villages, for example by providing more funding for police equipment. The Federal Agency for Technical Relief and the disaster management services will also receive more support.
• Security through cohesion: Cohesion and justice are closely linked. It goes without saying that those who work hard are entitled to receive a stable pension and reliable health care, old-age nursing care, good education opportunities and support for their family. Child benefit and the child supplement, for example, will each be increased by five euros from 2025. Another key aspect of cohesion is affordable housing, which is why more than 20 billion euros are to be invested in social housing by 2028. 
• Security through growth: Investment activity continues to increase to record levels: 57 billion euros in the year ahead alone. The federal government invests in areas that are relevant to citizens and the economy: rails, roads, public transport and digital infrastructure. In addition, the expansion of renewables is being accelerated.
• The growth initiative: The Federal Government is seeking to boost the economy to stimulate business momentum without delay. The aim here is to promote Germany as a business hub and sustainably improve its competitiveness. Research subsidies are to be increased, for example, and tax improvements are to be introduced for companies, the self-employed and employees.

The growth initiative PDF, 322 KB, not barrier-free is to be adopted by the Federal Cabinet on 17 July, along with the 2025 budget. The draft budget provides for a total of 481 billion euros of expenditure, and 44 billion euros of net borrowing.

Further information PDF, 56 KB, not barrier-free about negotiation of the 2025 draft budget and the growth initiative can be found here (only German).