Economic news

Germany’s 2024 budget reverses fiscal trend since 2019

2023.09.12 13:35


© Reuters. German Finance Minister Christian Lindner speaks during a plenum session of the lower house of parliament, Bundestag, to present the 2024 budget and financial planning of the Federal Government, in Berlin, Germany September 5, 2023. REUTERS/Annegret Hilse

BERLIN (Reuters) – Germany’s debt has grown since 2019 due to the pandemic and the war in Ukraine but the pattern will change this year, German Finance Minister Christian Lindner said on Tuesday.

“With the 2024 budget presented by the Federal Government, we have succeeded in reversing the fiscal trend,” he said at an Economic Dialogue event focused on the budget.

Last week, the minister presented Germany’s budget for 2024 in the Bundestag, as one of the first steps in the country’s return to sustainable finances.

The public deficit is likely to end up at 2.5% this year, instead of the original 4.25% estimate. Next year, it could be around or below 2%, Lindner said, including federal, state and municipality expenses and social security funds.

The trend reversal must be followed in other areas, reducing not only debt, but also bureaucracy, he added.

“If we reduce bureaucracy, it does not cost money, but actually saves funds in the state budget. We need to strengthen our economic growth, for example by cutting red tape.”

He warned that from 2028 and beyond, Berlin will face additional expenses, such as repayment of pandemic-era debts and European Union funds or complying with the 2% NATO quota without the special fund for the armed forces, an “iceberg” coming in the horizon.

Now is the time to act, before problems become obvious, Lindner said.

“If we start to act in the year before 2027, then a manoeuvre of the last moment, as they say in sailing, will no longer help, but we will crash into the iceberg.”

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