Stop the citizen's benefit increase in 2024: What that means for budget policy

Stop the citizen's benefit increase in 2024: What that means for budget policy

According to a report by www.tagesschau.de,

In order to plug the billion dollar hole in the budget, politicians from the CDU and FDP are calling for the increase in citizens' money to be stopped for 2024. In the negotiations between Chancellor Olaf Scholz, Economics Minister Robert Habeck and Finance Minister Christian Lindner, there is a struggle to find ways out of the billion-dollar hole, which Lindner estimates at 17 billion euros. The social sector and thus also citizens' money were identified as a savings area.

At the beginning of 2024, it is planned to increase citizens' benefit for over five million adults and children in basic security by up to 61 euros per month. The exact increase is determined by the Federal Ministry of Labor and Social Affairs every year by the end of October, with inflation developments playing an important role. The price index relevant to standard needs takes into account, for example, food for which the inflation rate is above average. The planned increase in standard requirements has already been passed by law and the payment processes are already underway. Stopping an adjustment of the standard rates, as demanded by the CDU and FDP, would therefore no longer be technically possible.

The calculation of the citizen's allowance is based on the income and consumption sample (EVS), which provides statistical information about the living conditions of private households in Germany. The consumption expenditure of low-income households serves as the basis for the calculation. Social Minister Hubertus Heil rejected the request to stop the increase in citizens' benefits. He stressed that such a measure was morally irresponsible and incompatible with the Constitution.

Given these facts, it seems unlikely that the planned increase in citizens' allowance for 2024 can be stopped. The regulations that have already been passed by law and the technical implementation of the payout processes speak against a possible prevention of the increase. However, the impact on the market or the financial sector is limited because it is a social policy measure that affects basic security and thus the social sector.