Read aloud
The traffic light was no longer able to manage a budget for next year. The “provisional budget management” will therefore take effect from January. What this means for Germans’ tax money.
Chancellor Olaf Scholz has lost the vote of confidence in the Bundestag, which means the end of the rump government of the SPD and the Greens is finally sealed. The Germans are expected to elect a new Bundestag on February 23rd. Until then, there will be an election campaign – and until then, more or less nothing will happen in terms of federal politics.
The reason for this: Although the minority government is still in office – and, as its representatives repeatedly emphasize, “capable of acting” – it does not have an approved federal budget for the coming year. That’s why a special rule for state finances and thus citizens’ tax money, the so-called “provisional budget management”, comes into effect from January 1st.
What this means is a procedure in which the government is allowed to carry out ongoing expenses as usual; all payments to which she is legally obliged continue to flow. However, a spending reservation applies to new projects. The finance minister, who has been the social democrat Jörg Kukies since the dismissal of Christian Lindner (FDP), has to raise or lower his thumb on every major investment, such as a new funding decision.
The Ministry of Finance informed the ministries and the highest federal authorities about this procedure in a circular on Monday. The 28-page document is available on t-online. It states: According to Article 111 Paragraph 1 of the Basic Law, expenditure may only be made “if it is necessary to maintain legally existing institutions and to carry out legally decided measures in order to fulfill the federal government’s legally justified obligations” – or “in order to “Continue construction, procurement and other services”, appropriate amounts should have already been approved for this in the previous year’s budget.
In concrete terms, this means, for example, that citizens’ benefit, pensions, child benefit or funding from existing programs will continue to be paid. The same applies to construction work that has already been planned, for example on the railway. However, if the government wanted to attract a large company to Germany with billions in funding, this would probably not be possible without further ado.
The budget discussions for the coming year were still in full swing at the time the traffic light broke. After the federal government completed its draft in the summer after much wrangling, parliament was actually supposed to agree on a final version by the end of November.
At that time, the SPD, Greens and FDP had already reached agreements on the budgets of individual ministries, but this was still pending on others, such as the budget of the Ministry of Defense. The entire budget for 2025 was not approved because the governing coalition lacked a majority in parliament after the Liberals left at the beginning of November.
For the provisional budget management, which will take effect from January, the Ministry of Finance is now using the budget estimates from the government draft, which is not entirely undisputed among experts. For example, law professor Hanno Kube from the University of Heidelberg recently told the “Frankfurter Allgemeine Zeitung” that this approach was “not covered by the Basic Law” because it was only a draft and not a budget approved by the Bundestag as the budget provider. Rather, according to Kube, the budget estimates must be based on the last budget drawn up by the Bundestag, i.e. the federal budget for 2024 – the volume of which is smaller than that planned for the coming year.
The Ministry of Finance doesn’t think much of this view. When it comes to controlling costs, the spending ratio is more important than the theoretical size of the respective budgets, according to ministry circles: To ensure that the ministries do not spend a disproportionate amount of money by early summer 2025, when a new government is expected to be in place, they are initially only allowed to spend 45 percent use the budget.
However, the ministries’ quota for the interim budget management is not set in stone: the finance minister can adjust it at any time. In addition, it may also be exceeded for legally justified obligations. The ministry and the budget committee can approve other excesses. The ministry emphasizes that the state is able to act at any time.
According to the Ministry of Finance, there should be a new regular budget in mid-2025. If the coalition negotiations after the federal election on February 23rd went very quickly, there would be the possibility of reaching the Federal Council meeting on July 11th with a budget law, the ministry said, although they admitted: “That would be an ambitious plan, a budget law by then to have.”
