German budget draft will be submitted in early July, says finance minister

BERLIN (Reuters) – Germany’s budget draft will be submitted at the beginning of July, without an increase in taxes and respecting the debt brake included in the constitution, Finance Minister Christian Lindner said on Monday.

Germany’s three-party government – comprising Lindner’s Free Democrats, the Social Democrats and the Greens – have been in dispute over the budget for months, exposing cracks in the government and casting uncertainty over spending plans. Spending requests significantly exceed revenues.

“If our country is to have a future, we cannot continually have defensive spending and focus on financing the past,” he said at an event of the German industry association BDI.

Lindner defended a change in budget policy to focus more on the future. “In an ageing society, social contributions and interest payments will slowly strangle us,” Lindner said.

German Chancellor Olaf Scholz defended the planned cuts in the 2024 budget. “Step by step, we must now return to the fiscal policy normality we had before the pandemic and before the energy crisis,” he said at the same event.

Government spending in the billions would be returned to the level “with which we managed well for years before the crises,” he said.

However, this is a controversial issue within his party, the SPD, which has pushed for years for significantly higher investment, financed by debt if necessary.

The consolidation in the 2024 budget will require setting clear priorities, Scholz said. “Security, climate neutrality and solidarity – these are the three priorities that the 2024 budget will reflect,” he added.

(Reporting by Maria Martinez, Christian Kraemer and Andreas Rinke; Editing by Christina Fincher)