After weeks of wrangling, the German cabinet on Wednesday finalized its 2025 budget and sent the 480.6 billion euro ($526 billion) package to parliament for approval.
The budget was the subject of weeks of tense negotiations within Chancellor Olaf Scholz’s divided and unpopular three-party coalition.
The total amount of €480.6 billion is approximately €8 billion less than this year.
The budget now needs to be approved by lawmakers, with a likely vote in November.
The initial framework proposal, approved by coalition leaders earlier this month, was criticized by critics who said it did not do enough to strengthen the military and boost growth.
However, Finance Minister Christian Lindner on Wednesday called the agreement the “beginning of an economic turnaround” for Germany, as the cabinet also decided on several economic policy measures to boost recently weak growth.
“With our growth initiative, we are providing an important economic policy impetus to make Germany more attractive as a location for companies,” said Lindner.
“New room for manoeuvre in the budget can only be created by more economic growth. To achieve this, we need to increase our competitiveness and strengthen our innovation capacity,” he said.
There are plans to improve investment depreciation and research compensation for German companies. In addition, the coalition wants to reduce bureaucracy and ease the burden on energy-intensive companies in terms of electricity prices.
Employees should be encouraged to work more and longer, with overtime exceeding collectively agreed full-time hours exempt from tax and contributions. Tax breaks are planned for foreign workers and company cars.
Stricter rules are planned for recipients of citizen income.
A total of 49 measures are planned and several legislative changes must be implemented before the end of the year.
