A budget deal for 2024 remains elusive for German Chancellor Olaf Scholz and his coalition partners, as they face a massive spending gap caused by a court ruling on debt rules.
Scholz, who leads the Social Democratic Party, said on Saturday at his party’s congress that the court’s decision posed a “very difficult task” for the government.
He also ruled out any reductions on social benefits, saying: “In such a situation, there will be no cuts on the welfare state in Germany.”
He did not give any details on the negotiations, but expressed his hope that they would “convey the confidence that we will succeed” in reaching an agreement.
The government’s budget plans were thrown into disarray last month, when the constitutional court said it had violated a debt rule by transferring 60 billion euros ($65 billion) from a pandemic fund to a climate fund.
This left a 17-billion-euro hole in the budget, which the government had to fill by adopting an emergency budget for 2023 and revising its plan for 2024.
The coalition, which includes the Greens and the liberal FDP, faces pressure from the opposition conservatives and the FDP itself to cut welfare spending.
Another source of tension is the debt brake rule, which limits the state’s borrowing to 0.35 percent of GDP, unless there are exceptional circumstances.
The FDP opposes any further suspension of the debt brake, which has been waived since 2020.
But the SPD wants to keep the debt brake suspended in 2024, to allow for more spending, according to a resolution passed unanimously at the party congress.
The Greens’ Economy Minister Robert Habeck also wants to proceed with “all projects that we have conceived”.
The SPD’s parliamentary group conceded earlier this week that parliament would not be able to pass the 2024 budget this year.
But Scholz and his allies are still aiming for a political deal by the end of the year, which could then be submitted to parliament in early 2024.